Int'l Tax News

by Jenice Robinson (Citizen for Tax Justice)

A report by the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations on the federal corporate tax system "conveniently ignores the fact that copious tax breaks and loopholes allow U.S. companies [to] pay a relatively low effective tax rate," according to a July 30 release by Citizens for Tax Justice.

For the CTJ report, go here.

by Amy S. Elliott (Tax Analysts)

In a reversal of traditional roles, members of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI) pointed fingers at themselves July 30while all but apologizing to executives from five companies for the pressures that America's corporate tax code places on their businesses.

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

Policy makers should make effective use of environmental taxes to ensure green growth strategies take root in their economies, the Organization for Economic Cooperation and Development said.

The Paris-based organization's 100-page report, released July 27, evaluated the progress of its 34 member countries and a handful of non-OECD emerging economies on implementing the green growth framework it launched in 2011.

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

For U.S. multinational companies that pay one of the highest tax rates in theworld, one alternative may not be much sweeter: paying the lowest tax rate in theworld.

Senators exploring changes to U.S. international tax policies at a hearing July 30 came awaywith a cautionary note from a retired executivewho said Congress should reduce the top corporate tax rate from 35 percent to 25 percent and go no lower.

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

by Doug Palmer (Politico)

A key tax-writer unveiled legislationwednesday proposing to give companies a special low tax rate on profits stemming from intellectual property, in the first glimpse of an international tax code rewrite House Republicans hope to push through Congress later this year.

The bill, by Rep. Charles Boustany,would create an "innovation box" offering companies a 10 percent tax rate on income derived from innovations, a substantial cut from the 35 percent corporate tax rate they'd otherwise face.

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

By John D. McKinnon (Thewall Street Journal)

House Republicans' quest to overhaul the tax code took a step forwardwednesday, as top members of theways and Means Committee rolled out a plan to stop the migration of U.S. intellectual property to other countries.

The plan -- designed to be broadly appealing to many businesses -- is expected to become one of the cornerstones of a broader revamp of U.S. corporate tax rules that Republicans on the committee are expected to construct in comingweeks.

For thewall Street Journal story, go here.

To help keep research and development aswell as high-paying jobs in America, Rep. Charles Boustany (R-LA) and Rep. Richard Neal (D-MA) today released a bipartisan discussion draft of an "innovation box"ÔøΩor a special, lower tax rate for income derived from intellectual property. They are seeking feedback on their proposal, and an updated version is expected to be included in the broader international tax legislation that theways and Means Committee is pursuing this fall.

For the release, go here.

Today, Houseways and Means Committee members Charles Boustany (R-LA) and Richard Neal (D-MA) released a bipartisan discussion draft for an "innovation box"ÔøΩa special lower tax rate on income derived from intellectual property. Such a proposal is likely to be part of broader international tax reform that the committee is pursuing, and Chairman Paul Ryan (R-WI) released the following statement in response.

For the release, go here.

Blaming foreigners for homegrown economicwoes is a tradition of sorts in Washington. In recent years, the favored scapegoat has been China and its folkloric trade indiscretions. But, lately, some have taken to demonizing foreign companies for the sins of a broken U.S. corporate tax system. Given the importance of foreign multinationals and their U.S. affiliates to the U.S. economy, let's hope policymakers don't do anythingwe'll regret.

For the Forbes story, go here.

by Nick Bunker (Washington Center for Equitable Growth)

The U.S. financial services sector has undergone quite a bit of reform since the housing and financial crises of 2007-2009 laid low the global economy. Yet concerns about the scope and role of this industry remain a hot topic of debate. A variety of proposals have been offered that either shrink the financial services industry overall by reducing its profits or use rules and regulations to alter its influence across the economy. But it is the often-discussed financial transaction tax that's drawing attention anew among policy thinkers.

For thewashington Center for Equitable Growth story, go here.

by Joseph Lawler (Washington Examiner)

White House economic adviser Jason Furman expressed skepticism Tuesday about a tax idea that has been gaining support on both sides of the aisle in Congress.

Asked if the Obama administration supported an "innovation box," or a special low rate on income from intellectual property, as part of a larger international tax reform, Furman seemed to endorse a different strategy preferred by liberals instead.

For thewashington Examiner story, go here.

by Rahph Cunningham (International Tax Review)

The UK is stepping up the pressure on large businesses to be more transparent about their tax policy and complywith their obligations in a publicway.

For the ITR story, go here.

Keith Brockman, the EMEA tax director for Mars, argues that the new demands for fiscal transparencywhich accompanied the inception of the OECD-led base erosion and profit shifting (BEPS) action plan ignored omnipresent thorns of complexity.

For the ITR story, gohere.

by Ralph Cunningham (International Tax Review)

The official launch of the Tax Inspectorswithout Borders (TIWB) programme has come at a timewhen tax collection could not have a higher profile as a means of helping developing countries generate their own resources rather than rely solely on aid from richer countries.

For the ITR story, go here.

In this exclusive op-ed piece for International Tax Review, Chris Lenon, former head of tax for Rio Tinto and an expertwitness to the Independent Commission for the Reform of International Corporate Taxation (ICRICT), argues that a focus on incentives and ultra low or no tax jurisdictions should be policy makers' priority, rather than ideas included in the commission's report, such as allocation.

For the ITR op-ed, go here.

Joe Stanley-Smith talks to Sue Cooper, group head of tax at global asset management company Schroders, about the financial transaction tax and other challenges facing the financial services sector.

For the ITR interview, go here.

by Ralph Cunningham (International Tax Review)

Tax justice campaignerswere left disappointed by the UN's third international conference on financing for development lastweek as delegates declined to heed their calls to establish a new global tax body,whichwould take over the roles of the UN and the OECD in setting international tax standards and giving guidance.

For the ITR story, go here.

Taxpayer education should have a key role in tax collection strategy because it encourages a culture of tax compliance and leads to stronger domestic resource mobilization in the developingworld, the OECD says in a new guidance book published on July 28.

For thewWTD story, go here. (subscription required)

Advisers from Deloitte Germany look back at the Federal Tax Court's favourable ruling on the applicability of trade tax to controlled foreign company income.

For the ITR story, go here.

Draft legislation to provide preferential tax rates on intellectual property emerged amidst much fanfare from Republicans and at least one Democrat on the Houseways and Means Committee.

The proposal, floated July 29 by two senior members of the tax-writing panel, Reps. Charles Boustany, Jr. (R-La.) and Richard E. Neal (D-Mass.),would establish a 10 percent tax rate on qualifying income andwaive taxes on repatriated intellectual property until sold, all as part of a U.S. innovation box.

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

Houseways and Means Committee members Charlesw. Boustany Jr., R-La., and Richard E. Neal, D-Mass., released their much-anticipated innovation box proposal on July 29, to mixed reviews from practitioners and mostly encouragement from other lawmakers.

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

During a July 29webcast, EY practitioners discussed how some countries are taking a cue from the OECD's base erosion and profit-shifting project and broadening the permanent establishment concept in an effort to tax a greater share of multinationals' profits the countries believe are connected to their territory.

For thewWTD story, go here. (subscription required)

The European Commission (EC)will put forward plans to radically change the VAT Directive by allowing member states to introduce their own reduced rates of VAT, International Tax Review understands. No official announcement has been made.

For the ITR story, go here.

A bipartisan pair of House members announcedwednesday that theywant to give multinational companies a 10 percent tax rate on income derived from intellectual properties.

Reps. Charles Boustany (R-La.) and Richard Neal (D-Mass.) onwednesday rolled out a draft of their long-awaited "innovation box,"which is expected to be a central component of a broader House overhaul of the U.S.'s international tax structure. Some Republicans and Democrats have shown an interest in marrying that sort of tax revampwith a highway bill.

For the Hill story, go here.

Houseways and Means Committee members Charles Boustany, R-La., and Richard Neal, D-Mass., have released a bipartisan proposal to create a so-called "innovation box," a lower tax rate on income derived from intellectual property to encourage more multinational companies to keep intangible assets in the U.S.

For the Accounting Today story, go here.

The Senate Permanent Subcommittee on Investigations recently examinedthe effect of the U.S. tax code on the market for corporate control of Americancompanies. Through a detailed review of several important cross-border transactions, the
investigation found that the increase in after-tax profits created by escaping theU.S. tax net can (i) contribute significantly to foreign corporations' ability to acquireAmerican firms; and (ii) create powerful incentives for American firms that mergewith foreign corporations to locate their new combined headquarters abroad. Bothphenomena can lead to a significant loss of American jobs, business headquarters,and tax revenues.

For the report, go here.

The Big Four accounting firmsÔøΩKPMG LLP, PricewaterhouseCoopers LLP, Deloitte & Touche LLP, Ernst & Young LLPÔøΩhave played a "crucial" role in helping multinational companies minimize tax in the European Union by assisting in the design and negotiation of sweetheart tax rulings, the European Parliament special tax committee said in a draft report.

For the BNA DTR story, gohere. (subscription required)

Regulations on the foreign tax credit, loans by controlled foreign corporations and intangibles under tax code Section 367(d) are all high on the government's priority list and could be ready relatively soon, a Treasury Department official said.

Acting Deputy International Tax Counsel Douglas Poms said that aswork on the Organization for Economic Cooperation and Development's base erosion and profit shifting project nears its close in September, Treasury is hoping to have more time to devote to guidance that taxpayers are eagerly awaiting on home soil.

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

Jeffrey Owens and Eric Zolt discuss how tax policy can address the increasingly unequal distribution of income andwealth around theworld.

For thewWTD interview, go here. (subscription required)

The OECD's final report on action 4 (interest expense) of the base erosion and profit-shifting projectwill recommend that countries adopt a fixed ratio approach somewhere between 10 and 30 percent, according to Douglas Poms, acting Treasury deputy international tax counsel.

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

by Stephen K. Cooper (Tax Analysts)

Houseways and Means Committee members Charlesw. Boustany Jr., R-La., and Richard E. Neal, D-Mass., are putting the finishing touches on an innovation box proposal thatwould provide lower U.S. tax rates on income derived from intellectual property.

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

Organization for Economic Cooperation and Developmentworking Party No. 11, on aggressive tax planning, has completedwork on four action items under the international project to combat base erosion and profit shifting (BEPS), a U.S. Treasury official said.

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

The Internal Revenue Service (IRS) Large Business and International division (LB&I) released 46 International Practice Units (IPUs) on December 15, 2014, and three more on July 17, 2015. These IPUs provide guidance to IRS examiners in addressing a range of issues involving US federal income taxation of cross-border activities. For the PwC Insight, go here.

A senior GOP lawmakerwill roll out a planwednesday to cut taxes for income spurred by intellectual property, as House Republicans lay the groundwork for a potential major highway and tax reform deal.

Rep. Charles Boustany (R-La.) said his so-called "innovation box"would be a central part of the House GOP's plan to revamp how the U.S. taxes multinational corporations,which he expectsways and Means Chairman Paul Ryan (R-Wis.) to introduce this fall.

For the Hill story, go here.

The Australian Taxation Office (ATO) has released a new practice statement, PS LA 2015/4,which outlines the process itwill follow for advance pricing arrangement (APA) negotiations. The new process applies to all ongoing APA negotiations and future APA requests (both new APAs and renewals).

For the PwC Insight, go here.

Although governments in recent years have implemented policies to promote green growth, they can learn from common challenges, particularly tax-related issues such as environmentally harmful tax system discrepancies, to speed up progress on their own green goals, the OECD said in a July 27 report.

For thewWTD story, go here. (subscription required)

This report describes and assesses the principal prescriptions that have been offered for broad reform of the US international tax system.

For the report, go here.

Jill Gatehouse and Susanna Brain (Freshfields Bruckhaus Deringer) review the state of play on the OECD's project to tackle base erosion and profit shifting (BEPS), and highlight the main points of interest.

For the Tax Journal article, go here.

Multinational corporations and foreign-owned Spanish subsidiarieswill be subject to stricter reporting requirements in Spain from 2017, after a decree outlining requirements to provide country-by country reports of a group's entireworldwide activities to Spanish tax authorities entered into force.

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

by Mindy Herzfeld (Tax Analysts)

Mindy Herzfeld reviews recent efforts in the U.K. and Australia to address artificial avoidance of permanent establishment and considerswhether those and similar efforts in the OECD's base erosion and profit-shifting project override existing treaty provisions.

For the TNI article, go here. (subscription required)

by Reuven S. Avi-Yonah (Tax Analysts)

Reuven S. Avi-Yonah argues that the proposals in a July 7 report by Senate Finance Committee international tax reformworking group co-chairs Rob Portman, R-Ohio, and Charles E. Schumer, D-N.Y., are not an effectiveway of addressing the lockout effect.

For the Tax Notes letter, go here. (subscription required)

A senior adviser to the Advance Pricing and Mutual Agreement Program of the IRSwarns that current debates about use of the profit split method as part of the OECD's action plan on profit shifting could lead to standards based on politics, not economics.

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

The Organization for Economic Cooperation and Development'swork on base erosion and profit shifting has drawn increasing criticism from leaders of congressional tax-writing committees, in a shift from its relatively low profile over the last couple of years, a staff member of Congress's Joint Committee on Taxation said.

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

Reaching consensus in an international project to combat base erosion has been made more difficult because of the involvement of Group of 20 countries that are not part of the Organization for Economic Cooperation and Development, a former U.S. Treasury official said.

China, India and Brazil have been active participants in the OECD BEPS project, but they are not members of the OECD, said David Ernick, a former U.S. delegate to OECDworking Party No. 6.

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

The OECD may include a safe harbor that looks like one favored by the U.S. in itswork on hard-to-value intangibles under the base erosion and profit shifting project, an IRS official said.

It looks like a safe harbor is likely to be in the Organization for Economic Cooperation and Development's next draft on these intangibles, Kennethwood, a senior manager in the Internal Revenue Service's Advance Pricing and Mutual Agreement Program, said July 22.

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

by Alison Bennett (BNA.com)

U.S. multinational banks are facing big challenges and uncertainties as the deadline for the Organization for Economic Cooperation and Development's standard for global automatic information exchange rolls closer.

Dozens of countries have signed on to participate in the common reporting standard,which calls for each jurisdiction to share information on financial accountswith many others. Early-adopter countries must start implementing the CRS on Jan. 1, 2016ÔøΩa date U.S. companies should bewatching carefully.

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

The United States and the Socialist Republic of Vietnam signed an income tax treaty (with an accompanying protocol) on July 7, 2015. This is the first income tax treaty between the two countries. Unlike other recent treaties, the new US-Vietnam treaty does not eliminate source-country taxation on intercompany dividends, certain types of interest, or royalties. Importantly, the treaty provides that a building site or construction project can give rise to a permanent establishment (PE) after only six months.

For the PwC Insight, go here.

If Greece's ongoing fiscal quagmire demonstrates anything, it's that Europe's largestwelfare states live in denial. Even as the bills from decades of profligate spending came due, Greeks took to the streets, not to demand a new path but to insist on continuing the status quo. Even their European creditors, in calling for tax hikes instead of strictly pro-growth reforms,would perpetuate the tax-and-spend cycle. It thus comes as no surprise that these same nations are leading the charge through the Organisation for Economic Co-operation and Development to raise corporate tax rates globally.

For the Patriot Post story, go here.

Aligning profitswith "where value is created" is the defining issue for transfer pricing policy, Robert Stack, U.S. Treasury deputy assistant secretary (international tax affairs), said at a July 23 session of the National Association for Business Economics Transfer Pricing Symposium inwashington.

For the TNT story, gohere. (subscription required)

by Kevin A. Bell (BNA.com)

Forthcoming revisions to the Organization for Economic Cooperation and Development's transfer pricing guidelineswill not include radical changes, the U.S. delegate to the OECD's Committee on Fiscal Affairs said.

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