Int'l Tax News

Cutting the corporate tax rate to 25 percentwould raise $278 billion in corporate incomewhile maintaining the same tax revenue as at a 35 percent rate and providing less incentive for multinational corporations to shift income overseas,w. Gavin Ekins of the Tax Foundation said in an October report.
For the report, go here.

The EU member states' deal on plans for them to exchange details of their tax rulings for multinationals automaticallywas a "missed opportunity" to take a big step forward in fighting aggressive tax planning and unfair tax competition, says Parliament in an opinion voted on Tuesday. MEPs are unhappy that the 6 October deal unduly restricts both the scope of the draft "automatic exchange" directive and the European Commission's access to this information.
For the European Parliament release, go here.

Parliament's Special Committee on Tax Rulings recommended measures to make corporate taxes in the EU fairer and more transparent, after eight months of fact finding, in a vote Monday evening in Strasbourg.

The report – prepared by co-rapporteurs Elisa Ferreira (S&D, PT) and Michael Theurer (ALDE, DE) -was approved by 34 votes to 3,with 7 abstentions.
For the European Parliament release, go here.

Jeffrey Owens, director of the Global Tax Policy Centre at the Vienna University of Economics and Business (WU) Institute for Austrian and International Tax Law (IAITL) and former OECD tax chief, and Nathalie Bravo, research associate at the IAITL, explore the role of a multilateral tax instrument in implementing BEPS Project measures, and analyse the treaty issues and technical challenges to be overcome.

For the ITR story, go here.

The Irish Finance Billwas published on October 22 2015. Besides country-by-country reporting, it provides draft legislation of the first OECD modified nexus intellectual property box – the Knowledge Development Box (KDB). As expected, the tax rate applying to eligible income under the new regimewill be 6.25%. Gains from the disposal of IP remain taxable at 33%.

For the ITR story, go here.

Vitthal Dehadray of Franklin Templeton Asset Management and Rajeshree Sabnavis of BMR & Associates look at the emerging direct tax debates impacting the asset management industry in
India.
For the ITR article, go here.

Congress has a number of urgent items to consider in the next few months – how to dealwith the debt limit, how to fund the government, and how to fund our highway programs. For the sake of U.S. businesses andworkers, there's another urgent item that needs Congress's attention sooner rather than later – tax reform.
For the Forbes article, go here.

After eight months of growing dissatisfactionwith existing mechanisms to ensure corporate tax fairness and transparency, the European Parliament's Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect on October 26 voted 34 to 3 to approve a draft report of its findings
For thewWTD story, go here. (subscription required)

The IRS is recommending that agents use a host ofwaysÔøΩincluding the Internet and travel abroadÔøΩto get foreign-based evidence for an international audit if the taxpayer can't be found or doesn't respond to information document requests. The advice comes in one of three new international practice units released by the agency's Large Business and International Division, to provide guidance on how to conduct cross-border audits and look at international transactions.
For the DTR story, go here. (subscription required)

The new proposed U.S. tax treatywith Japan provides for mandatory binding arbitration, according to a description (JCX-136-15) released by staff of the Joint Committee on Taxation.
The description, released Oct. 28, on the eve of a Senate Foreign Relations Committee hearing, is the most recent development in the growing international support for such arbitration.
For the DTR story, go here. (subscription required)

European Union states missed a key opportunity to ramp up the fight against aggressive tax planningwith a "watered down" Oct. 6 agreement to automatically exchange details on tax agreementswith multinationals, members of the European Parliament say.
For the DTR story, go here. (subscription required)

A special European Parliament tax committee has approved a report calling for a mandatory common, consolidated corporate tax base and stricter transfer pricing and tax ruling legislation.
After more than nine months of deliberations and hearings, the TAXE committee also approved amendments calling for an EU-minimum tax and a beefed-up Code of Conduct Group for Business Taxation. In addition, the panel recommended European Union-wide legal protections forwhistle blowers, such as thosewho revealed the Luxembourg tax rulings that are the subject of current investigations.
For the DTR story, go here. (subscription required)

The Department of Treasury is looking intowhether and how U.S. companies hitwith the U.K.'s recently enacted diverted profits tax may qualify for foreign tax credits, a Treasury official says. "There's a lot of interesting issues. Obviously, the foreign tax credit regulationswere not draftedwith these kinds of taxes, diverted profits taxes, in mind," Jason Yen, an attorney-adviserwith Treasury, says. "It is causing us to think about towhat extentwe need to rethink pieces of those regulations," he says.
For the DTR story, go here. (subscription required)

Treasury and the IRS have yet to determinewhether the U.K. diverted profits tax or repayments of amounts that the European Union has deemed illegal state aid constitute foreign income taxes for foreign tax credit purposes.
For the TNT story, go here. (subscription required)

On October 5, 2015, the OECD released its highly anticipated final set of reports under its base erosion and profit shifting (BEPS) project, containing measureswhich, if implemented fully,would represent the largest shift in international tax principles in history. This feature provides a summary of the project to date, andwhat individual nations are doing, or intend to do, to make it a reality. - See more at: http://www.tax-news.com/features/BEPS_What_Happens_Next__573142.html#sthash.t8eF7Lnj.dpuf
For the Tax News editorial, go here.

The OECD has been leading the charge to improve transparency in tax administration and curb tax avoidance by multinational companies. Endorsed by the G20 nations, including India, OECD recently came outwith a package of measures and a road map to tackle base erosion and profit shifting (BEPS). Grace Perez-Navarro, deputy director, Centre for Tax Policy and Administration, OECD, shares her insights on how the proposed action plan for attacking tax avoidancewill change theway multinational companies are taxed theworld over.
For the Business Standard story, go here.

Mindy Herzfeld discusses a recentwTO ruling striking down a number of measures that Argentina enacted to shore up its tax base, and explainswhy tax administrators need to be mindful of potential conflicts between tax and trade ruleswhen enacting new tax laws.
For the TNI story, go here. (subscription required)

A group of UN tax experts have achieved modest progress toward clarifying an array of thorny and emerging tax policies that confront theworld's developing nations.
For the DTR story, go here. (subscription required)

The chances that 11 European Union member stateswill agree on a financial transactions tax by December are fading.
For the DTR story, go here. (subscription required)

The sweet, earthy aroma from the brewery here is inescapable. The Stella Artois logos are hard to miss at the sprawling factory near the headquarters of the company,which employs thousands ofworkers across the country.

For Belgium, the global beer giant Anheuser-Busch InBev is a corporate champion, a source of homegrown pride and the country's largest company by market value. But its clout,whichwill only growwith the company's $104 billion deal to buy SABMiller, is also the source of scrutiny.

As a dominant player in Belgium, the company has enjoyed accommodations from the government that allow it to significantly lower its tax bills.

The friendly tax arrangement is part of a pattern that small countries like Belgium use towoo multinationals. Such deals are increasingly coming under fire, and the European Union's competition commissioner is investigatingwhether some of them amount to illegal state aid.
For the New York Times story, go here.

The European Union said itwill require Starbucks Corp. and Fiat Chrysler Automobiles NV to pay tens of millions of euros in back taxes after ruling that the companies benefited from illegal tax deals, in an unprecedented decision that risks overturning thousands of corporate tax structures across Europe.
For thewall Street Journal story, go here.

Bill Ings (pseudonym) contends that the new base erosion and profit-shifting permanent establishment rules may be hard to implement, because in most cases, identifying the personwho recommended the contract can be difficult.
For the Tax Notes letter, go here. :(subscription required)

Tax directors of international companies say that the United States and some other countries are becoming more aggressive in pursuing and litigating transfer pricing cases, and the companies' responses range from the logical to the almost ludicrous.
For the TNT story, go here. (subscription required)

John Merrick, special counsel to the IRS associate chief counsel (international), indicated October 22 that the use of some so-called Up-C structures in transactions facilitating the movement of U.S. corporations offshore raises policy concerns for the government under section 367.
For the TNT article, go here. (subscription required)

In news analysis, Lee A. Sheppard looks at a discussion from the recent International Bar Association meeting in Vienna that focused on BEPS topics of interest to private equity -- interest deductions, permanent establishment, and treaty benefits.
For the Tax Notes article, go here. (subscription required)

Proposals to tighten key aspects of Britain's business-friendly tax regime ÔøΩ the treatment of interest and patents ÔøΩwere put forward by the Treasury on Thursday.

But the government insisted it had notweakened its commitment to creating one of theworld's most competitive corporate tax systems in spite of the plans to implement a global crackdown on avoidance.
For the Financial Times story, go here.

Starbucks and Fiat took the heat onwednesday. Now thousands of other multinationals doing business in Europe are asking a similar question:will they, too, be caught up in a far-reaching Brussels crackdown on tax avoidance?

Muchwill depend on Margrethe Vestager, the EU's competition commissioner,who onwednesday declared that the companies' highly-advantageous tax agreementswith the Netherlands and Luxembourg, respectively, amounted to illegal forms of state aid.


For the Financial times story, go here.

The Treasury has brushed off criticism from US multinationals of its new tax on "diverted profits" as it steps up its efforts to promote the UK's tax system to foreign investors.

David Gauke, Treasury minister, said just one out of 60 companies he met on a US tour said the 25 per cent levy on profits artificially shifted out of the UK had made it think again about investing in Britain. He said: "Of course not everyone is happy . . . but itwas very rare to find anyonewho said the UK is now unattractive to us."
For the Financial Times story, go here.

Richard Collier comments on the OECD's final base erosion and profit-shifting project report on permanent establishment status, highlighting areas he believes need further guidance.
For the TNI viewpoint, go here. (subscription required)

Isolated changes to the international tax system may be insufficient to prevent base erosion and profit shifting, and an EU standard of international tax secrecy is needed to balance the interest of the publicwith the protection of taxpayers, according to studies commissioned by a European Parliament special committee.
For thewWTD story, go here. (subscription required)

Irish officials are confident that Irelandwill be compliantwith the standards set by the OECD's final base erosion and profit-shifting recommendations.
For thewWTD story, go here. (subscription required)

Mindy Herzfeld reports on action 7 of the OECD's base erosion and profit-shifting project,which she says develops new permanent establishment standardswithout taking into account the realities inwhich most cross-border business is undertaken.
For the TNI article, go here. (subscription required)

On October 14, 2015 Luxembourg released bill 6900 (the Budget Bill) and bill 6891 (the Tax Measures Bill).

If approved by Parliament, these measureswould amend the existing Luxembourg netwealth tax, repeal the Luxembourg intellectual property (IP) regimewith a transitional period, and modify the country's existing corporate and individual tax rules.
For the PwC Insight, go here.

It's hard to disagreewith Margrethe Vestagerwhen she says that "all companies, big or small, multinational or not, should pay their fair share of tax." It's also hard to see howwhat she announced onwednesdaywill make the system any fairer.
For the Bloomberg editorial, go here.

Congress needs to lower the corporate tax rate from its current 35% to discourage U.S. insurers from moving offshore, according to the head of Travelers Cos. Inc.
For the Business Insurance story, go here.

On September 8 2015 the Mexican President, Enrique Peña Nieto, submitted the 2016 tax reform package for approval to Congress. Should Congress approve the package, itwould come into force on January 1 2016.
For the ITR story, go here.

On October 5, 2015, the Organisation for Economic Co-operation and Development (OECD) released its deliverable on Base Erosion and Profit Shifting (BEPS) Action 14: 2015 Final Report, Making Dispute Resolution Mechanisms More Effective (the "Report"). According to the Report, countrieswill commit to develop a minimum standard in the context of treaty-related disputes andwill ensure effective and efficient implementation of this standard through the establishment of a peer-based monitoring process.

For the PwC Insight, go here.

Luxembourg and the Netherlands lost a bit of luster as tax havens for some of theworld's biggest companies as the European Union fired its latest salvo aimed at multinational tax dodging.
Yet the Netherlands is on pace to maintain its attractiveness as a tax-friendly address for multinationals, according to several tax advisers to big companies. That's less likely for Luxembourg, they said.
For the DTR story, go here. (subscription required)

Guidance on the anti-inversions Notice 2014-52 is a top priority and the Internal Revenue Service is hoping to have regulations out by the end of the calendar year, a senior agency official said.

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

As the OECDwraps up the first phase of its project to combat base erosion and profit shifting, the focus of the project needs to shift beyond raising revenue to growing economies, a U.S. Treasury official says. "We are still in a period of global austerity. And the guywith the money is the multinational," says Robert Stack, deputy assistant secretary for international tax affairswith Treasury,who has been a key figure in the BEPS negotiations.
For the DTR story, go here. (subscription required)

The U.K. government this summer published a consultation document proposing that large businesses be required to publish a "tax strategy," introducing a voluntary Code of Practice on taxation for large businesses and creating a "special measures" regime for companies HMRC regards as engaging in unacceptable tax avoidance. Dan Neidle of Clifford Chance asks how these proposals are likely towork,what they mean in practice for U.K. business andwhether the Code of Practicewill really be "voluntary."
For the DTR story, go here. (subscription required)

In an about-face, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said the United Stateswill participate in the effort to draft a multilateral instrument under action 15 of the OECD's base erosion and profit-shifting project to implement treaty-related BEPS measures.
For the TNT story, go here. (susbscription required)

Although theworld's finance ministrieswere breathing a sigh of relief after the OECD's final base erosion and profit-shifting reportswere issued, a Treasury official said that a lot ofwork remains to be done regarding the treaty abuse provisions, including on the new language addressing the limitation on benefits in the model treaty.
For the TNT story, go here. (subscription required)

Edward Tanenbaum of Alston & Bird examines final IRS regulations (T.D. 9720) regarding the definition of "substantial business activities" in the context of inversions and how the rules have tightened as they evolved. Tanenbaum says the new regulations reflect the government's aggressive approach to closing down inversions.
For the BNA report, go here. (subscription required)

The beneficial tax programs and incentives offered by European nations for the development and use of intellectual property can allow multinational corporations to benefit simultaneously from relief for investment expenses aswell as significantly reduced income tax rates, according to a new study.

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

Germany and Japan recently finished their negotiations on a new tax treaty between the two countries and initialed a draft agreement thatÔøΩamong other itemsÔøΩincludes new regulations on profit attribution in relation to permanent establishments stipulating use of the so-called Authorized OECD Approach.
For the BNA Insight, go here. (subscription required)