Int'l Tax News

Proposed regulations attacking "aggressive" positions on outbound transfers of intangibles are aimed at abuses the government is seeing now, a Treasury official says. The rules significantly affect the technology and pharmaceutical industries, among a range of others. Brenda Zent, a special adviser in Treasury's Office of International Tax Counsel, says officials set an immediate effective date because "we view the regulations as shutting down an abuse."
For the DTR story, go here. (subscription required)

Treasury "got far along" a different route before reaching a decision to completely eliminate the foreign goodwill and going concern exception in the context of recognition of gain upon outbound transfers of intangibles, a Treasury official said October 20.
For the TNT story, go here. (subscription required)

A European Parliament panelwill attempt Oct. 26 to force major overhauls in European Union corporate tax policywhen it votes on a report calling for changes on a beefed-up Code of Conduct Group for Business Taxation, new transfer pricing rules,whistle-blower protections, tougher rules for enforcing tax rulings and an EU-wide definition of a tax haven.
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There is a global trend toward profit attribution principles that fall along a continuum between the arm's-length principle and formulary apportionment, said a panel of international tax experts.
For the TNT story, go here.(subscription required)

In news analysis, Lee A. Sheppard reports on an October 21 International Tax Institute luncheon in New York, atwhich an IRS official discussed recent partnership guidance addressing cross-border transfers: proposed and temporary section 956 regulations and a notice promising regulations under section 721(c).
For the Tax Analysts story, go here. (subscription required)

In the second of a series of updates on intangibles valuation and intellectual property (IP) assets, NERA principal Philip de Homont and affiliated consultant Alexander Voegele look at intangibles that allow companies to charge higher prices, and methods used to determine license fees.
For the ITR story, go here.

On October 14, the Luxembourg Government presented its 2016 Budget, containing certain tax measures to be introduced in 2015 and 2016. A progressive reduction of the Luxembourg corporate income tax rate has also been announced for 2017 but no further details have been provided.
For the ITR story, go here.

The executive branch of the Mexican government has submitted a tax reform proposal to Congress as part of the economic package prepared for 2016. The proposal honours the promise of the executive branch to not increase taxes during the rest of its term, and includes certain benefits, although it does increase the compliance burden for Mexican companies and, notably, includes country-by-country reporting (CbCR) obligations for Mexican entities in linewith BEPS.

For the ITR story, go here.

Politicians criticize "Benedict Arnold companies" that move abroad,where taxes are lower. But name-callingwon't bring them back. Lower tax rates might, and a new study shows the governmentwould benefit.
The nonpartisan Tax Foundation finds that because a lower tax ratewould bring jobs and investment back to these shores, the added employment and activitywould mean more revenues for Uncle Sam.

For the investors.com story, go here.

There is increasing public protest about the easewithwhich multinationals seem to play national tax systems to avoid paying tax.
The Organization for Economic Co-operation and Development's (OECD) 'Base Erosion and Profit Shifting' (BEPS) proposals thatwere published recently are the response. Despite the dry title, I thinkwe should be impressed by BEPS – it is transformative.
For the Forbes article, go here.

Effective dispute resolutionwill be the key to ensuring that the Organization for Economic Cooperation and Development's project on base erosion and profit shifting truly changes the international tax system, an officialwith the United States Council for International Business said.
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The OECD's final report on transfer pricing-related action items under its project to combat base erosion and profit shifting has resulted in a "fitter arm's length principle," an officialwith the organization told a transfer pricing conference in Toronto.
Andrew Hickman, head of the OECD's transfer pricing unit,was a keynote speaker Oct. 15 at the conference sponsored by Bloomberg BNA and Baker & McKenzie LLP.
For the DTR story, go here. (subscription required)

Starbucks Corp. and a Fiat Chrysler Automobiles NV unit are set to be first in the firing line as European Union regulators issue a series of rulings over tax breaks for global companies, including Apple Inc.
The EU may issue decisions against Starbucks and Fiat as soon as theweek of Oct. 19 following a two-year probe into how the companies may have gotten unfair tax treatment from Dutch and Luxembourg authorities, people familiarwith the cases said.
For the DTR story, go here. (subscription required)

The revised transfer pricing guidelines in the OECD's final BEPS project report on actions 8-10 remain somewhat ambiguous and lack consensus on attributing value to functions, but they could stillwork if effective dispute resolution methods are in place, Carol Doran Klein of the U.S. Council for International Business said October 15.
For the TNT story, go here. (subscription required)

One purpose of the OECD's final report on transfer pricingwas to illustrate thewide range of circumstances underwhich nonrecognition should not be applied, according to Andrew Hickman, head of the transfer pricing unit of the OECD's Centre for Tax Policy and Administration.
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The recent uptick in country-by-country reporting implementation activity should only accelerate further now that the final reports under the OECD's base erosion and profit-shifting project have been issued, and differences among regimes are already evident, according to Barbara Angus of EY'swashington office.
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The OECD's final base erosion and profit-shifting project report on revised transfer pricing guidelines has forged a fitter arm's-length principle, but government officials, policy leaders, and tax planners have an important role to play to keep the standard strong, said Andrew Hickman, head of the OECD's transfer pricing unit.
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The terminology in the OECD's final report on transfer pricing may in some cases distract from the underlying concepts, according to Brian Jenn, attorney-adviser, Treasury Office of International Tax Counsel.
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The Irish government, long criticized by other European countries and the United States for its friendlytaxtreatment of multinational giants like Apple andGoogle, on Tuesday announced a move that seemed likely to further incense its critics.
Ireland,whose corporatetaxrate of 12.5 percent is already one of the lowest in the developedworld, said itwould cut that rate in half for a newtaxcategory -- one covering revenue pegged to companies' patents and other intellectual property.
For the New York Times story, go here.

Nathalie Bravo, Rita Julien, Jasmin Kollmann, Alicja Majdanska, and Laura Turcan of the Vienna University of Business and Economics summarize a recent discussion of tax treaties that took place during a conference held by the Institute for Austrian and International Tax Law.
For thewWTD report, go here. (subscription required)

Although developing countrieswelcomed the final OECD base erosion and profit-shifting project reports, they need the support of the international community, particularly the IMF,world Bank, OECD, and U.N., to increase their tax administration capacities, a Senegalese official said.
For thewWTD story, go here. (subscription required)

U.S. regulations on country-by-country reporting, still on track to be released by the end of 2015,will closely follow the OECD'swork under action 13 of its base erosion and profit-shifting project, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said during an October 13webcast sponsored by KPMG LLP.
For the TNT story, go here. (subscription required)

Another G-20 summit next month means another opportunity forworld leaders to complain that global companies pay too little in taxes. Right on cue, theOrganization for Economic Cooperation and Development(OECD) has released its final proposals for combatting "base erosion and profit shifting," or BEPS.
For thewall Street Journal story, go here.

Treasury Secretary Jack Lew said Friday that the Obama administrationwould implement new rules thatwould lead to sharing business's informationwith foreign governments.
Lew praised the final recommendations from an Organization for Economic Cooperation and Development project meant to battle offshore tax avoidance, saying therewas a "critical need to fix our tax rules to address erosion of our corporate tax base."
For The Hill story, go here.

As part of the U.K. government'swar on tax avoidance, taxpayers are now being obliged to pay tax in dispute before the true liability is finally resolved; Trevor Johnson takes a look at a recent court case inwhich the taxpayerswere required to hand back tax repayments made to them more than 10 years ago.
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OECD tax chief Pascal Saint-Amans dismisses critics' claims that the OECD's base erosion and profit-shifting project does not go far enough to include all developing countries at the negotiating table.
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Ajay Gupta considers how creditability requirements restrict source jurisdictions from passing on the tab of environmental levies to the U.S. treasury.
For thewWTD story, go here.

Mindy Herzfeld reviews the information exchange framework in the final report on BEPS action 5 and explains how that frameworkwill require spontaneous, automatic exchanges of rulings that go far beyond the scope of the earlier draft -- including retroactive rulings -- allwithout notice to taxpayers.
For thewWTD story, go here. (subscription required)

Disagreement remains between the United States and some of its OECD counterparts on a number of issues addressed in the final base erosion and profit-shifting reports, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
For the TNT story, go here. (subscription required)

G-20 finance ministers on October 9 expressed full support for the OECD's "historic" base erosion and profit-shifting project and stressed the importance of implementing the project's final measures in their countries' domestic legislation as soon as possible.
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Itwas billed as the biggest change to global taxation in a lifetime.when G20 governments agreed to overhaul the tax rules for multinationals in 2013, itwas a response to an unprecedented public outcry against avoidance.

The details of the blueprint have just been published andwere metwith criticism from campaigners and some academicswho said the approach takenwas fundamentally inadequate.
For the Financial Times story, go here.

Theworld's leading finance ministers agreed on Friday to change the rules on taxing profits, andwarned multinational companies they could no longer use their size and international presence to dodge taxes.

Under the rules, companies such as Starbucks, Amazon and Googlewill find it harder to concentrate their profits in low-tax countries and tax havens ÔøΩ a shift that promises to raise up to $250bn a year in extra tax revenues, according to the OECD.

For the Financial Times article, go here.

G20 finance ministers endorsed the final package of measures for a comprehensive, coherent and co-ordinated reform of the international tax rules during a meeting on 8 October, in Lima, Peru.
For the OECD release, go here.

On October 8, the G20 finance ministers met to discuss international tax rules. The Organization for Economic Cooperation and Development (OECD) has presented a series of measures to be considered.
For the SBE Council report, go here.

Developing countries are getting serious about increasing tax revenue as part of their domestic resource mobilization efforts, and theworld Bank and IMF are encouraged that they are taking advantage of "intensive technical support" to help strengthen their tax systems,world Bank President Jim Yong Kim said.
For thewWTD story, go here. (subscription required)

Finance ministers of the Commonwealth announced that they have agreed to create aworking group on tax in a bid to increase their member states' participation and influence in international tax policy decision-making.
For thewWTD story, go here. (subscription required)

After two years of breakneckwork, the Organisation for Economic Co-operation and Development (OECD) published its final reports lastweek on the Base Erosion and Profit Shifting (BEPS) project,which is aimed at coordinating international taxation among member countries.while thiswork may have drawn little attention from the general public, tax experts around the country are busy analyzing the impact of the recommendations,which are likely to be significant for many U.S.-headquartered companiesÔøΩincluding tech companies.
For the ITIC report, go here.

The G20 finance ministers on October 8 endorsed the final package of recommendations presented to them in Lima, Peru by the OECD, marking the end of the Paris-based organisation's project to tackle base erosion and profit shifting (BEPS). National authorities are now beginning to react.
For the ITR story, go here.

Michael Noonan, Irish finance minister, delivered his Budget 2016 speech on Tuesday. Taxpayers around theworldwere keen to see how the country amended its international tax provisions in thewake of OECD recommendations in this area.
For the ITR story, go here.

The OECD's final base erosion and profit-shifting reports do not fundamentally depart from the prior OECD guidelines or the section 482 regulations, according to Brian Jenn, attorney-adviser, Treasury Office of International Tax Counsel.
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The Canadian Department of Financewon't move quickly in considering the recommended best practices for limiting interest deductions under the final report on Action 4 of the international project to combat base erosion and profit shifting, a former government official said.
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The U.S. is "just not in a position to commit" to the OECD's common reporting standard in 2017 or 2018when early-adopting countries start taking part in automatic exchange of a broad range of financial information, a Treasury official said.
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Although the United States supports the best practices outlined in the OECD's final base erosion and profit-shifting report on action 14 (improving dispute resolution mechanisms), an IRS official expressed disappointment that many of those best practiceswere not included as elements in the minimum standard.
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In news analysis, Lee A. Sheppard reports on remarks made by the OECD's Pascal Saint-Amans during the Tillinghast lecture in New York, tying in Ireland's recent decision to reduce its tax rate for intellectual property developed in the country.
For the TNT story, go here. (subscription required)

Cyprus is one of Europe's premier business locationswith low, stable rates and favourable incentives offered to businesses. Recent tax developments have only served to make it more attractive.
For the ITR story, go here.