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What Brookings Misses On The Financial Transactions Tax: A Net Revenue Loss From It
The Brookings Institute has a briefing paper out on the financial transactions tax ideas floating around. And sadly,while much of the paper is entirely reasonable, they manage to miss the most important point about an FTT.which is thatwhilewewill all be able to see the revenues that come from the taxwewon't be able to see the fall in revenues that come from our having a smaller economy as a result of the tax.
For the Forbes article, go here.
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Vestager denies Brussels is targeting US companies in tax probes
Margrethe Vestager, the EU's powerful competition chief, has rebuffed claims fromwashington that a series of tax probes she has launched into multinationals such as Apple and McDonald's amount to unfair discrimination against US companies.
Ms Vestager haswritten to Jack Lew, the US Treasury secretary, saying the probes "aim at a proper, non-discriminative, application of tax laws in Europe" and are "based on firm legal ground".
For the Financial Times story, go here.
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EU Tax Ruling May Prompt Business Move Out of Belgium
Some multinational companies operating in Belgium are considering shifting part of their business out of the country after the European Union declared a government tax discount illegal and is requiring the companies to pay back hundreds of millions of euros in unpaid taxes.
The European Commission, the bloc's antitrustwatchdog, in January ordered Belgium to recoup about 700 million euros ($765 million) from some 35 companies after concluding that a Belgian tax-discount plan for multinationalswas distorting competitionwithin the EU's single market.
Butwith the program overturned, some companies are consideringwhether to transfer part of their operations out of Belgium.
For thewall Street Journal story, go here.
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News Analysis: Dividend Stripping and Derivatives to Avoid Withholding Challenged
Despite the U.S. failure to serve as a model for taxation of multinationals in recent years, it is providing a model for taxation of financial transactions.
For the Tax Notes article, go here. (subscription required)
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BEPS Action 7 Makes PE Avoidance Trickier, Stack Says
Action 7of the OECD's base erosion and profit-shifting project has broadened the rules for defining a permanent establishment to make it easier for countries to determinewhether a PE exists, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
For the TNT story, go here. (subscription required)
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U.S. Model Tax Treaty More Closely Aligned With OECD Model
The recently updated U.S. model income tax conventionwas drafted to conform more closely to the OECD model treaty but does not introduce any type of primary purpose test, according to Treasury International Tax Counsel Danielle Rolfes.
For the TNT story, go here. (subscription required)
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Stack: U.S. Would Halt Exchange of Tax Data If Made Public
The U.S.would halt the exchange of country-by-country information to a jurisdiction that makes the reports public, a top Treasury official said.
"There is no circumstance inwhich the U.S. CBC information that's given by the IRS can be made public as a general matter, or as a matter of compliancewith some other legislative rule," said Robert Stack, deputy assistant secretary for international tax affairs at Treasury. "If they take IRS information and make it public,wewill stop sending it, because it violates our treaties."
For the DTR story, go here. (subscription required)
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Should the U.S. Adopt a Value-Added Tax?
In discussions about changing the U.S. tax system, one topic almost always arises: the possibility of adopting a value-added tax.
After all, most of the industrializedworld uses a VATÔøΩwhich is not to say they all like it.
For thewall Street Journal article, go here.
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Dutch Propose EU Transfer Pricing Probe If Reports Fall Short
Multinational companies that don't provide adequate information to subsidiaries for mandatory country-by-country tax and profit reporting to tax authoritieswould face subsequent transfer pricing probes, under a proposal to be considered by EU finance ministerswhen they meet March 8.
For the DTR story, go here. (subscription required)
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IRS: Foreign Credit Spells Big Tax Cuts for U.S. Companies
U.S. corporations doing business overseaswere able to take a big chunk out of their income taxes in 2011ÔøΩmore than 41 percentÔøΩby claiming the foreign tax credit, the IRS said.
The data comes at a timewhen controversy continues to percolate on Capitol Hill surrounding tax breaks for U.S. multinationals.
For the DTR story, go here. (subscription required)
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Retroactive Effect of Finland's BEPS Guidance Likely Limited
In Finland, any new interpretations of the OECD transfer pricing guidance issued under the organization's project to combat tax base erosion and profit shiftingwill need to adhere to existing law, the country's tax administration said.
For the DTR story, go here. (subscription required)
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Final US Model Income Tax Treaty could significantly reduce access to treaty benefits
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Treasury's Inversion Rules Need Work: N.Y. Bar Tax SectionNope thi
The Treasury Department should rework its anti-inversion rules to require a foreign acquirer to conduct substantial business activities in the countrywhere it is a tax resident, rather thanwhere it is organized, the New York State Bar Association Tax Section said.
For the DTR story, go here. (subscription required)
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Companies Have Lost PR Battle on Taxes, U.S. Official Says
The U.S. business community has lost the global public relations battle on international tax planningÔøΩand should considerwhether a proposed global minimum taxwould be better for their interests than continuingwith the status quo, a top Treasury Department official said.
For the DTR story, go here. (subscription required)
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OECD Actively Discussing Use of U.S. Model Tax Provisions
The OECD is actively looking at three provisions in the newly released U.S. model treatyÔøΩincluding those on special tax regimes, limitations on benefits, and an anti-abuse provision involving permanent establishmentÔøΩas talks go forward on its own model treaty and a multilateral instrument, a top official told Bloomberg BNA.
For the DTR story, go here. (subscription required)
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Administration Won't Renegotiate U.S. Tax Treaties in Senate
The Treasury Department doesn't plan to renegotiate tax treaties currently before the Senate even though it recently published a new model treaty, a top official said.
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U.S. Multinationals Losing Tax Reform Debate, Stack Says
U.S. multinationals are losing the public debate on international tax reform by continuing to play games and shift income between low-tax jurisdictions, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
For the TNT story, go here. (subscription required)
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Poms Noncommittal on Hopscotch Expansion for Non-Inverters
A senior Treasury official on February 25 remained noncommittal regarding a recently published proposal inTax Notescalling on Treasury to expand the anti-hopscotch rule enunciated in 2014's anti-inversion guidance beyond the inversion context.
For the TNT story, go here. (subscription required)
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Inversion Guidance Gave Momentum to Partnership Transfer Notice
Amid questions aboutwhy the IRSwaited nearly two decades to release guidance under section 721(c) on cross-border partnership transfers, an IRS official on February 25 cited an unlikely source as providing the necessary "momentum" to issue the new notice announcing the coming regs: 2014's anti-inversion notice.
For the TNT story, go here. (subscription required)
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BEPS, State Aid Issues Raise Questions About Foreign Tax Credits
As other countries gear up to protect their tax bases, U.S. taxpayerswith foreign income need to seriously considerwhat may happen to their foreign tax credits, according to Bretwells, a professor in international tax at the University of Houston Law Center.
For the TNT story, go here. (subscription required)
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Wyden Announces Forthcoming International Tax Reform Plan
The Senate's top Democratic taxwriter on February 25 announced that he isworking on an international tax reform package, offering it in explicit contrast to Republican visions of reform for attendees of an Urban-Brookings Tax Policy Center conference inwashington.
For the TNT story, go here. (subscription required)
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Ending the One-Two Corporate Tax Punch
We don't often agreewith President Obama's chief economist, Jason Furman, but he got it exactly rightwhen he noted earlier this month that the U.S. treatment of international business income is a "stupid territorialtaxsystem."
His point is simple. On paper, the U.S. has aworld-widetaxsystem that imposes two layers oftaxon overseas business income -- an initial foreigntaxwhen the money is earned and a second U.S.taxwhen the money is repatriated. In practice, however, companies actively avoid the U.S.taxby various means, including inversions (moving their headquarters abroad by mergingwith foreign corporations), shifting profits to foreign subsidiaries, and hoarding the cash overseas. The result is, in effect, a territorial system, but one that produces less revenue for theU.S. Treasuryand less growth for the U.S. economy.
For thewall Street Journal article, go here.
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Revenue Implications of a Potential U.S. Patent Box
A robustworkforce and ample investment are the main ingredients of a growing economy. But the alchemy that produces truly booming economies often lies in technological breakthroughs. To foster these leaps in innovation, nations (the United States included) provide funding for basic research patent protections and tax incentives. Innovation or patent "boxes" are a growing feature of many nations' research support policies that attract research-intensive investment. Patent boxes offer preferential tax treatment of income derived from intellectual property, often patent-related income.
For the American Action Forum story, go here.
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Poorer countries handed role in tax evasion fight
Developing countrieswill be invited by G20 governments to join talks aimed at stopping multinationals dodge taxes in a bid to defuse tensions over their limited role in global tax reform.
Finance ministers meeting in Shanghai later thisweek are expected to endorse proposals to open up talks on stopping "base erosion and profit shifting" (BEPS) to all countrieswilling to implement them.
For the Financial Times story, go here.
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OECD announces agreement on framework for broader BEPS participation in BEPS stage two
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Hatch, Brady Offer Differing Strategies to Stem Inversions
Separate but parallel plans to establish a more territorial tax system for U.S. companies' overseas profits and end double taxes on corporations are advancing, according to their chief champions in Congress.
Both plans should lessen pressures pushing businesses to relocate abroad for tax purposes, Houseways and Means Committee Chairman Kevin Brady (R-Texas) and Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said.
For the DTR story, go here. (subscription required)
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The European Commission's State Aid Cases: A Threat to Standard European Structures for U.S. Multinational Enterprises?
Philip Morrison of McDermottwill & Emerywrites that the European Commission's state aid cases against U.S. multinational enterprises have potential implications for some of the standard structures used by U.S. MNEs in Europe. He says the Commission's rulings are as much a political attack as a legal one.
For the BNA Insight, go here. (subscription required)
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Patent Box Could Cost Up to $236 Billion, Group Estimates
Proposals to cut taxes on intellectual property could cost as much as $236 billion or as little as $5 billion over a decade, according to an analysis from the American Action Forum.
The range reflects differences inwhat may be considered intellectual property for the purposes of the lower tax rate, aswell aswhether the changewould happen as part of a broad reshaping of the U.S. tax code.
For the DTR story, go here. (subscription required)
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Study Says EU-U.S. Trade Deal Could Hamper Evasion Fight
Astudy by advocacy groupsTransnational Institute and Global Justice Now says a free trade deal proposed between the European Union and U.S.would hamper efforts to fight tax evasion by making it easier for corporations to challenge tax rulings before investor-state dispute settlement (ISDS) tribunals.
For the DTR story, go here. (subscription required)
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March Deadline Set for International Tax Draft as Urgency Mounts
An international tax reform draft from a Houseways and Means subcommittee should be ready by the end of March, the subcommittee's chair said February 24.
"For international,we are hoping to get something done this first quarter,"ways and Means Tax Policy Subcommittee Chair Charlesw. Boustany Jr., R-La., told reporters after a full committee hearing on international tax reform. "Iwant to have a bill; that'swhat the chairmanwants me to do."
For the TNT story, go here. (Subscription required)
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Corporate Integration Can Complement Other Reforms, Hatch Says
Senate Finance Committee Chair Orrin G. Hatch, R-Utah, said February 24 that his corporate integration plan and the Houseways and Means Committee's efforts on international tax reform could complement each other.
For the TNT story, go here. (subscription required)
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Valuation Implications of Proposed Goodwill Regulations
In this article, Brewer and Antoon discuss recently proposed regulations under section 367 thatwould dramatically change the treatment of goodwill and going concern value transferred by a U.S. person to a foreign corporation.
For the Tax Notes article, go here. (subscription required)
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Indian Budget - what tax changes can multinational companies expect
Taxpayers, tax advisers and politicos alike are eagerly awaiting India's 2016 Budget,whichwill be released on Monday [February 29].will BEPS be covered, andwhich Action Pointswill feature?will there be an update on GST?what other indirect tax changes might there be?
For the ITR story, go here.
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Proposed tax deductions in Hong Kong's 2016-2017 Budget
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EU has gone too far targeting US companies
Wielding a new brand of aggressive investigations, the European Commission is unduly targeting U.S. businesses to fill the budget holes of European Union countries.
For the CNBC story, go here.
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Is Global Tax Diplomacy Paying Off?
Thewords 'International regulatory tax framework harmonisation' are unlikely to spark the interest of most readers – andwriters – at first sight. Few enjoy exploring the patchwork of international tax arrangements,when filling out tax returns alone can leave themquestioning the sanity of the bureaucracies that created them.Evenworse are agreements coated in layers of jargon so thick that you'd need a tax lawyerwith a pickaxe to decipher them. Therefore it is not surprising that their importance to the global economy is difficult to quantify.
For the MCGill International Review article, go here.
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Boustany: International Overhaul Unlikely' This Year
Between the presidential election and a gridlocked political environment on Capitol Hill, it's "probably unlikely" that lawmakerswill be able to pass an international tax overhaul bill this year, but Congress can still make progress, a top House taxwriter said.
For the DTR story, go here. (subscription required)
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Levin Bill Would Prevent Earnings Stripping Tied to Inversions
A bill thatwould limit how some corporations use earnings stripping as a tax avoidance strategywas introduced February 23 by Houseways and Means Committee ranking minority member Sander M. Levin, D-Mich.
For the TNT story, go here. (subscription required)
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EU Aims for Business-Friendly VAT Proposal, Moscovici Says
Value-added taxes across the European Union should be simplified and made less burdensome for companies and households, EU Economic Affairs and Tax Commissioner Pierre Moscovici said.
For the DTR story, go here. (subscription required)
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OECD Invites All Countries to Implement BEPS Measures
The OECD has agreed to a new framework thatwould allow all interested countries and jurisdictions to join in implementing the final recommendations of its project to combat base erosion and profit shifting.
For the DTR story, go here. (subscription required)
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Do Foreign Corporations Really Not Strip the U.S. Tax Base?
Patrick Driessen is a former revenue estimator for the Joint Committee on Taxation and the Treasury Department.
In this article, Driessen praises the OECD for beginning to comprehensively measure base erosion and profit shifting. The OECD's finding that there is abundant global evidence that foreign-controlled companies shift profits out of high-tax nations contrastswith the inconclusiveness of U.S. government research onwhether earnings stripping generally happens here. Resolving the question of how much U.S. base erosion occurs should inform how the United States approaches international tax reform.
For the Tax Notes Viewpoint, go here. (subscription required)
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Feb. 24 Hearing Seen as Platform for New Chief Tax Counsel
A familiar face is expected at the Feb. 24 Houseways and Means Committee hearing on international taxesÔøΩBarbara Angus, the panel's new chief tax counselÔøΩwho should have the chairman's ear throughout the proceedings.
That private dialogue on the daiswith Rep. Kevin Brady (R-Texas)will differ from the last timeways and Means held an international tax hearing,when Angus sat at thewitness table Dec. 1.
For the DTR story, go here. (subscription required)
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Present Law and Recent Global Developments Related to Cross-Border Taxation
In a February 23 report (JCX-8-16) prepared for a Houseways and Means Committee hearing on international tax reform, the Joint Committee on Taxation described current law, policy issues, and recent global activity regarding cross-border taxation.
The JCT summarized principles behind the international tax system and current law regarding inbound and outbound taxation, taxation of nonresident aliens and foreign corporations, and taxation of U.S. taxpayers' foreign activities.
For the JCT report, go here.
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OECD Proposes 'Striking' Inclusive Framework for BEPS Implementation
The OECD unveiled an inclusive framework inviting all countries and jurisdictions towork on base erosion and profit-shifting project implementation on an equal footingwith OECD and G-20 countries, a proposal that is "quite striking," tax chief Pascal Saint-Amans told Tax Analysts.
For thewWTD story, go here. (subscription required)
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House Dems move to stem flow of US business headquarters overseas
Two top House Democrats introduced legislation Tuesday afternoon to limit one of the main tax benefits for U.S. companies that reincorporate in foreign countries.
For The Hill story, go here.
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House Republican: International tax reform unlikely this year
The chairman of a House tax-policy panel said Tuesday that international tax reform is not likely to be enacted this year.
"It's probably unlikely given the short timelinewe've got, given the occupant in thewhite House, and also dealingwith the Senate," said Rep. Charles Boustany (R-La.), the chairman of the Houseways and Means Committee's tax policy subcommittee.
For The Hill story, go here.
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The Accidental Inversion Myth: Much Ado About Nothing?
Oscar Grisales-Racini is a partnerwith Grisales-Racini Shefer LLP, an international tax boutique law firm in Miami.
In this report, Grisales-Racini describes the misunderstanding of section 7874(b) and its application to corporate inversions and the 1980 Foreign Investment in Real Property Tax Act.
For the Tax Notes special report, go here. (subscription required)
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Australia: Foreign Companies Must Pay Tax or Lose Assets
Multinational companies investing in Australia that don't meet their full tax liability on domestic earnings could be forced to sell their Australian assets under a new plan announced by Treasurer Scott Morrison.
For the DTR story, go here. (subscription required)
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IMF's Lagarde Urges Dramatic Changes to Global Tax Rules
Global tax rules need to be significantly revised to address a global economywhere more of the value comes from services and intellectual property, not "fields and factories," IMF Managing Director Christine Lagarde said.
For the DTR story, go here. (subscription required)
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Bermuda in No Rush to Adopt Corporate Tax: Finance Minister
Bermudawon't bow to international pressure to introduce a corporate income tax, but iswatching how the U.S. implements country-by-country reporting before taking action, Finance Minister Everard Richards confirmed in his 2016-17 budget presentation to parliament.
For the DTR story, go here. (subscription required)