Int'l Tax News

An international tax climate that has grown increasingly hostile to U.S. multinationals is an outgrowth of corporate tax planning strategies run amokÔøΩand enabled by ineffective transfer pricing enforcement, a former IRS official said.

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

Over the last seven years, America has flexed its muscles at tax havens everywhere.withSchwarzenegger-like bulk, the U.S. has crushedSwiss banks and rootedout U.S. account holdersworldwide.with its ambitious FATCA undertaking, the U.S. has cowed theworld into submission. making foreign banks and foreign governments handoverwhatwould be secret bank data about depositors.
Yet ironically, a new reportby the Tax Justice Network says that the U.S. doesn't practicewhat it preaches. Indeed, the report ranks America as one of theworst. How bad?worse than the Cayman Islands.
For the Forbes story, go here.

Measures he championed in a comprehensive tax reform bill in Congress last year are still needed to grow the U.S. economy and improve its global competitiveness, former Rep. Dave Camp told AICPA members Monday at the 2015 National Tax Conference inwashington.
For the Journal of Accountancy story, go here.

Ajay Gupta compares the Court of Justice of the European Union's recent ruling that bitcoin is currency for EU VAT purposeswith IRS Notice 2014-21 declaring the cryptocurrency to be property, and considers how to determine its situs for U.S. transfer tax purposes.
For thewWTD story, go here. (subscription required)

In 1968, McClay started a drug company in Craigavon, a half-hour's drive from Belfast. Not one to stand on ceremony, he sometimes held employee meetingswhile he peeled potatoes in the company kitchen. After McClay took his Galen Holdings public in 1997, he became one of his country's most active philanthropists andwas knighted by the Queen.

But his company may have a bigger impact than McClay,who died in 2010, everwould have guessed. Galen has turned into a vessel that has allowed four successively larger American drug companies to pull their operations out from under the U.S. tax regime. Pfizer, theworld's largest drug company, could be the fifth to renounce its U.S. corporate citizenship and reduce its corporate taxes.

For the Bloomberg story, go here.

The OECD has published its final report on the base erosion and profit shifting (BEPS) Action Plan item 4 dealingwith interest deductibility. The aim of Action 4 is to produce recommendations for best practice rules to prevent BEPS through the use of interest expense, although they do not represent a minimum standard.

For the PwC Tax Policy Bulletin, gohere.

In the first of a two-part article, James P. Fuller comments on U.S. tax developmentswith international implications, focusing this month on the 13 base erosion and profit-shifting final reports released by the OECD October 5.
For the TNI article, go here. (subscription required)

Mindy Herzfeld reviews the tax aspects of two recently announced business deals -- the Yum! Brands Inc. spinoff of its Chinese business and Dell Inc.'s proposed acquisition of EMC Corp. -- and discusses how the base erosion and profit shifting final reports might lead to unintended consequences.
For the TNI article, go here. (subscription required)

The IRS issues its agents a slew of training materials on foreign areasÔøΩsuch as the treatment of foreign base company sales and services incomeÔøΩin seven new international practice units. The units are intended to teach agents about how to approach and audit cross-border issues.
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In news analysis, Marie Sapirie says that the effect on U.S. multinationals of the OECD's base erosion and profit-shifting projectwill depend on the degree of consistency achieved in implementing the proposed changes.
For the Tax Notes article, go here. (subscription required)

In economic analysis, Martin A. Sullivan notes the growing interest in taxing normal and excess profits differently, and he sorts out the confusion overwhether excess profits should be penalized or promoted by examining the different reasons excess profits arise and the policy implications of those reasons.
For the Tax Notes article, go here. (subscription required)

In news analysis, Lee A. Sheppard discusses how the OECD's base erosion and profit-shifting project can change cash management in Europe and affect income stripping using loans.
For the Tax Notes article, go here. (subscription required)

The Obama administration is moving towards finalising measures to deter mergers designed to slash US companies' taxes as further outrage over the deals is stoked by Pfizer, the drugmaker.

After a 13-monthwait, the US Treasury could announce a second round of action to deter the inversion deals before the end of this year, saywell-connectedwashington tax experts.
For the Financial Times story, go here.

Philip Morrison of McDermottwill & Emery looks at how efforts of multinationals to shield intangible property income from U.S. taxation have evolved, and questions the potential impact of proposed "patent box" legislation intended to encourage domestic R&D.
For the BNA Insight, go here. (subscription required)

The U.S. premiere in New York on October 28 of the film The Pricewe Pay,which documentswhat the director says iswidespread tax avoidance by multinational enterprises,was followed by a panel discussion inwhich the participants said serious steps must be taken to allow shortchanged governments to meet vital social need
For the TNT story, go here. (subscription required)

Currently pending amendments to the Switzerland-U.S. tax treatywould allow for information exchange between tax authorities under a broader range of circumstances, according to testimony provided at a Senate Foreign Relations Committee hearing October 29.
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Moving between the various portions of recently issued regs that seek to address issues regarding subpart F inclusion in the context of loans involving foreign partnerships, officials from the IRS and Treasury explained their rationale for the new rules on October 29.
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One of the largest U.S. pharmaceutical companies, New York-based Pfizer Inc., may have finally found a merger partner thatwould enable it to move its domicile to Ireland and reduce its U.S. tax bill, even though the dealwould likely trigger the surrogate foreign corporation rules and be subject to limitations in a 2014 anti-inversion notice.
For the TNT story, go here. (subscription required)

Ian Read, meet Donald Trump and Hillary Clinton.

If the Pfizer Inc. chief executive officer does eventually make a dealwith Ireland-domiciled Allergan Plc, it could be away for the biggest U.S. drugmaker to finally escape the country's high corporate tax rate throughwhat's known as a tax inversion.

It could also put the drugmaker squarely in the middle of a political tug ofwar.
For the Bloomberg story, go here.

To start his new monthly column, Ralph Cunningham, the Hong Kong-based managing editor of International Tax Review, argues that capacity buildingwill be critical to BEPS implementation in the Asia-Pacific region if piecemeal, unilateral measures are to be avoided.
For the ITR column, go here.

Malta's Budget 2016was presented to parliament on October 12. See how your businesswill be affected.
For the ITR article, go here.

Read about the Swiss response to BEPS recommendations, including plans to implement the country-by-country reporting (CbCR) and information exchange provisions put forward by the OECD.
For the ITR article, go here.

In the third of a series on intangibles, Philip de Homont and Alexander Voegele, both of NERA Frankfurt, look at brand management centres in the age of BEPS.
For the ITR article, go here.

Dutch legislators published draft proposals for consolidation (fiscal unity) in the Netherlands on October 16, 2015. The legislation proposes:
a Dutch fiscal unity between a Dutch parent company and a Dutch sub-subsidiary owned by an intermediary company established in another EU member state, and
a Dutch fiscal unity between Dutch sister companies owned by an EU parent
For the PwC Insight, gohere.

Although U.S. states have been dealing for yearswith domestic issues related to base erosion and profit shifting, the OECD's BEPS project has now spurred an explosion of interest in addressing foreign-source income, particularly tax haven legislation, panelists said October 28.
For thewWTD story, go here. (subscription required)

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.
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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.
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The chances that 11 European Union member stateswill agree on a financial transactions tax by December are fading.
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