Int'l Tax News

The German Bundestag (the German parliament) on September 24, 2015, approved a bill making various amendments to German tax law for 2015 (Steueraenderungsgesetz 2015). The bill is not expected to change materially during the legislative process. Thereforewe expect it to be enacted as draftedwhen published in the Federal Gazette.

The amendments most relevant to multinational companies (MNCs) invested in German companies include:
broadening of the intra-group exception in the German loss forfeiture rules,
'clarification' of the attribution rules for events triggering the real estate transfer tax (RETT) for indirect transfers of German real estate owning partnerships,
a new substitute tax basis for RETT in case of share deals and real estate transfers upon reorganizations, and
a limitation on consideration (other than shares) allowed for tax-free contributions in-kind under the Reorganization Tax Act.
For the PwC Insight, gohere.

Guidance on the interaction between tax code Section 267(a)(3)(B), the foreign tax credit and Subpart F look-through rules isn't likely in the near future, although issues raised by practitioners do merit answers, a Treasury Department official said.

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

Lowell Yoder of McDermottwill & Emery looks at the Fifth Circuit's Subpart F ruling in BMC Software Inc. v. Commissioner, on the treatment of a CFC's account receivable from a U.S. parent arising under Rev. Proc. 99-32 from settlement of a transfer pricing dispute. Yoder says the case supports the proposition that such a receivable isn't an investment in U.S. property prior to entering a closing agreement, because it didn't exist.
For the BNA Insight, go here. (subscription required)

A push by financial institutions to create computer systems to calculatewhat types of dividend equivalents under new regulations are subject to a 30 percentwithholding taxwhen paid to foreigners highlights the importance of programmerswho understand technology and tax.
For the DTR story, go here. (subscription required)

A Treasury economist on September 25 tried to allay taxpayer fears about the transfer pricing environment in thewake of the OECD's base erosion and profit-shifting project.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on a September 28 International Tax Institute discussion of the interaction between section 267(a)(3)(B) and controlled foreign corporation rules.
For the Tax Notes article, go here. (subscription required)

The UK's opposition party, Labour, has set out its stall on taxation, reigniting the debate over the financial transaction tax (FTT) in the process.
For the ITR story, go here.

EU Member States have made progress towards improving their tax systems but most still face important challenges and should continue their efforts, according to a report on tax reforms in EU Member States published today by the European Commission. The Tax reforms report 2015, published by the Commission's Directorate General for Economic and Financial Affairs (ECFIN) and the Directorate General for Taxation and Customs (TAXUD), presents an overview of recent tax reforms in the Member States and gives an indication of their performance in major areas of tax policy.
For the report, go here.

Nearly 50 governments are set to agree this fall to a new set of rules to clamp down on tax avoidance among multinational corporations. Their chance of success, however, is unclear.

For thewall Street Journal story, go here.

Jack Bernstein examines the scope of actions and reactions by the European Union and several individual countries to initiatives to curtail base erosion and profit shifting.
For the TNI viewpoint, go here. (subscription required)

Mindy Herzfeld reviews the IRS's latest efforts to stem the tide of tax-free outbound transfers and explains how the newly issued proposed regulations under IRC section 367 reverse current law, as do the new temporary regulations under section 482.
For the TNI article, go here. (subscription required)

Tax competition as such cannot be avoided, but today's system has reached its limits and led to unwanted side effects. Small firms should not have to bear the tax burden of multinationals that pay very little. Action is needed to harmonise corporate tax practices across Europe, so as to make tax competition clearer and fairer. Thiswas the key sentiment voiced at Tuesday's meeting of the Special Committee on Tax Rulingswith finance ministers from Luxembourg, Italy, France, Spain and Germany.
For the European Parliament release, go here.

The final draft on the allocation of risk, to be unveiled by the OECD in October as part of its action plan on base erosion and profit shifting,will be on more "familiar ground" than the previous draft, moving away from concepts that many taxpayers found problematic, said one of the U.S. officials involved in the project.
For the DTR story, go here. (subscription required)

International tax practitionersworry that the OECD's base erosion and profit shifting project is inadequate to address the taxation implications of emerging technology trends.
There is a "perception that there's awholesale moving of finances around the globewithout tax authorities necessarily being able to get at it," said Anne Fairpo, a tax attorney at the London-based law firm of Temple Tax Chambers.
For the DTR story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on the remarks of Karlwalli, senior counsel (financial products) in the Treasury Office of Tax Legislative Counsel,who defended the final and temporary section 871(m) regulations at the recent American Bar Association Section of Taxation meeting in Chicago.
For the Tax Notes article, go here. (subscription required)

The Indian Government has moved to bring closure to the issue of minimum alternate tax (MAT) applicability to foreign entities.
For the ITR story, go here. (subscription required)

As the final recommendations of the 15 action plans that comprise the OECD Base Erosion and Profit Shifting (BEPS) project approach, Pramila Shrivastav, former Chief Commissioner of Income Tax at the Indian Ministry of Finance, looks at the associated issues from a developing country perspective, arguing that convergence of interestswill hold the key to countering complex BEPS challenges.
For the ITR story, go here.

The Indian Government has today moved to bring closure to the issue of minimum alternate tax (MAT) applicability to foreign entities.
For the ITR story, go here.

Driessen contends that public financial reporting and other representations (or the lack thereof) of deferred foreign earnings mislead policy analysis. He suggests that public accounting reform and better collection and presentation of information are needed to provide a more objective view of foreign deferral.
For the Tax Notes viewpoint, go here. (subscription required)

David Swenson, global leader of PwC's tax controversy and dispute resolution network, looks back at how megatrends in global tax controversy have developed over the past year, and ahead to the trends set to emerge in a post-BEPS environment.
For the ITR story, go here. (subscription required)

The Dutch government has released draft legislation thatwould adopt the OECD's proposed country-by-country reporting template, master file and local file under the documentation action of its international project to combat base erosion and profit shifting (BEPS).

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

The Kuwaiti tax authority has begun to use a "virtual service" permanent establishment theory to deny tax relief for nonresident companies, according to an EY affiliate in Kuwait City.
For the DTR story, go here. (subscription reqiured)

Robert Feinschreiber and Margaret Kent find several deficiencies in the discussion draft of action 12 (mandatory disclosure of aggressive tax schemes) of the OECD's base erosion and profit-shifting project.
For thewWTD viewpoint, go here. (subscription required)

The Irish government plans to include a country-by-country reporting requirement for multinational companies in its next budget bill in mid- to late October, a Department of Finance press official told Bloomberg BNA.
Ireland, through its participation inwork on the international plan to fight base erosion and profit shifting, "has committed to supporting introduction of OECD BEPS recommendations on country-by-country reporting," the official said in a Sept. 23 e-mail.
For the DTR story, go here. (subscription required)

The 11 European Union member states planning a financial transactions taxwill examine measures to limit unintended consequences for companies hedging risks via derivatives and to prevent financial institutions from shifting the tax burden to others, according to documents to be discussed at a meeting Sept. 29.

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

Even skilled tax experts can find themselves in a bad situationwhen it comes to helping companies enter new international markets.
Strategies like hiring local tax advisers, figuring out exit strategies and planning for cash repatriation before starting a project are all key to success in new international markets, tax professionals said during a panel discussion at the Bloomberg BNA and Mayer Brown energy tax conference in Houston.
For the DTR story, go here. (subscription required)

Look out, Thomas Piketty. Here comes Gabriel Zucman.
With a slim new book that has the feel of Piketty's bestselling "Capital in the 21st Century," Zucman, a baby-faced 28-year-old University of California-Berkeley economist, is taking his own swing at global capitalism. His target: tax havens that he says hide $7.6 trillionÔøΩabout 8 percent of theworld's net financialwealth.
For the DTR story, go here. (subscription required)

Determiningwhether or not to seek a tax ruling in the Netherlands or Luxembourgwill be a balancing act for European holding companies as new agreements to share these rulings among tax authorities goes into effect, tax practitioners said.
For the DTR story, go here. (subscription required)

The Treasury Department doesn't have the authority to require country-by-country reporting for U.S. multinationals to share employee, revenue and tax datawith foreign countries, Rep. Kevin Brady (R-Texas) said.
Brady, a senior member of the Houseways and Means Committee, said Congress has the authority to approveÔøΩor rejectÔøΩthe disclosure program that is a tenet of the Organization for Economic Cooperation and Development's base erosion and profit shifting project that seeks to increase transparency between companies and tax authorities.
For the DTR story, go here. (subscription required)

U.S. taxes on international profits need updating, but taking that action independent ofwholly rewriting the U.S. tax code risks economic upside, said former Houseways and Means Committee Chairman Dave Camp (R-Mich.).
Nevertheless, because lawmakers appear limited to addressing only international provisions for now instead of a broader tax revamp, he said they should seize the opportunity.
For the DTR story, go here. (subscription required)

The Treasury Department hopes to issue the new U.S. model tax treaty by the end of the year, said Quyen Huynh, an attorney-adviser in the Treasury Office of International Tax Counsel.
For the DTR story, go here. (subscription required)

With the OECD's two-year project to combat base erosion and profit shifting due towrap up in early October, a Treasury Department officialwarned countries not to engage in partisan tax administration thatwould cripple foreign direct investment.
For the DTR story, go here. (subscription required)

The Internal Revenue Service and the Treasury Department are hard atwork on regulations to implement the anti-inversions Notice 2014-52, said John Merrick, special counsel in the IRS Office of Associate Chief Counsel (International).
For the DTR story, go here. (subscription required)

China's top international tax official, noting that his nation is in the midst of momentous economic change, made a strong case for altering some of the rules of international taxation.

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

Australia's recent moves to combat multinational tax avoidanceÔøΩincluding potential double penalties on profit-shifting schemes by multinational companies earning more than A$1 billion ($721 million) per yearÔøΩis a "very moderate approach" that simply demands a shift back to traditional tax laws, an Australian tax official said.

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

Reorganization of the Internal Revenue Service's Large Business & International Divisionwill shift resources from individual audits of multinational companies to a broader consideration of overall compliance risks, LB&I Commissioner Douglasw. O'Donnell said.
For the DTR story, go here. (subscription required)

As the final BEPS deliverables approach, read about the impact the project is having on indirect tax policy in Norway.
For the ITR story, go here.

On September 16, 2015, Tax Laws Amendment (Combating MultinationalTax Avoidance) Bill 2015 (the Bill)was introduced into Australian parliament.

For the PwC Insight, go here.

WhenSalix Pharmaceuticals Ltd. last October abandoned plans to buy an Irish drug company and move its headquarters overseas, itwas chalked up as awin forwashington over "inversion" deals thatwere structured to avoid U.S. taxes.
The victorywas short-lived. In the year since the Treasury Department tightened its rules to reduce thetaxbenefits of such deals, six U.S. companies have struck inversions, comparedwith the nine that did so the year before.

For thewall Street Journal story, go here.

High levels of government support through such measures as tax breaks are hindering international efforts to decrease emissions and fight climate change, and there's plenty of room for countries to reform those measures, the OECD said in a report.
For thewTD story, go here. (subscription required)

Ajay Gupta considers the abrupt change in the public profile of U.S. Houseways and Means Committee Chair Paul Ryan, from champion of international tax reform to defender of domestic business interests against the OECD's base erosion and profit-shifting project.
For thewTD story, go here. (subscription required)

One day after the IRS offered its support of recently released guidance on the transfer of foreign goodwill and going concern value at a conference in New York, a Treasury official took the defense of the proposed regs on the road to Chicago, specifically justifying the immediate effective date of the new, dramatically more restrictive rules.
For the TNT story, go here. (subscription required)

Ordinary transactionswill not run afoul of recently modified antiavoidance rules that seek to treat a controlled foreign corporation as holding investments in U.S. property acquired by a controlled partnership, an IRS official assured practitioners on September 18.
For the TNT story, go here. (subscription required)

Douglas O'Donnell, Commissioner of the Large Business & International Division (LB&I), announced that LB&Iwould be reorganized around 'Practice Areas' at a Tax Executives Institute presentation on September 17, 2015. Commissioner O'Donnell indicated the new LB&I structurewas 'largely final' and scheduled to be implemented in early calendar year 2016.
For the PwC Insight, go here.

The U.S. Treasury Department last September issued a sternwarning to companies examining inversion deals: Tough rules are coming.

A year later, the companies and their tax lawyers are stillwaiting. The government hasn't released its first detailed rules. And a potential second set targeting maneuvers that push profits out of the U.S. isn't expected any time soon.

For the Bloomberg story, go here.

Mindy Herzfeld looks at the divergent views held by the OECD and tax practitioners on the processes employed in the OECD's base erosion and profit-shifting project and considers how the involvement of the G-20 influenced not only those processes, but also the expected outcomes.
For the TNI article, go here. (subscription required)

In news analysis, Lee A. Sheppard examines the Second Circuit's economic substance line of reasoning inBank of New York Mellon Corp. v. Commissioner, inwhich it held that valid foreign tax credits must involve genuine foreign business.
For the Tax Notes article, go here. (subscription required)