Int'l Tax News

The US Treasury has broken its silence over the EU's flagship tax investigations into Apple, Starbucks and Amazon to voice concerns that itwould ultimately bear the cost of any extra bills.

A senior official said a move by Brussels to force the multinationals to pay back taxeswould havewider implications for the US because the companywould receive a credit for the taxes paid overseas.

For the Financial Times story, go here.

With the long haul of a presidential election campaign just beginning, companies that leave the U.S. to lower their tax bills are likely to once again become political targets. But thatwon't prevent some firms from trying.
For the Crain's New York story, go here.

The rules that govern cross border profits enable systemic tax avoidance, because they allow profits to be shifted away fromwhere they are generated to another countrywith a lower (or zero) tax rate – all as a matter of accounting rather than real economic activities. These rules frequently serve the economic interests of the largest multinational corporations.
For the Guardian story, go here.

Ian Dykes, Tim Holmes, and Elizabeth A. Sweigart highlight the benefits of value chain analyses for multinational enterpriseswith highly integrated supply chains.
For thewWTD story, go here. (subscription required)

Even as big American companies launched an effort to get "innovation box" legislation passed in the U.S., a senior U.K. finance official said that country's patent box has been "well received" and is attracting investment by large pharmaceutical companies and others.

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

Specialists from the 11 European Union member states supporting an EU financial transactions tax convene in Brussels inwhat one official described as a technical meeting to discuss the "25 building blocks" thatwill eventually form the EU core group's policy on the FTT.
For the DTR story, go here. (subscription required)

President Obama's proposal to set a minimum tax for foreign-earned income is limited in scope, but "may have a large impact on the global pattern of investment and employment" by U.S. multinationals, the congressional Joint Committee on Taxation says in a report.
For the JCT report, go here.

Taxes are a crucial component of a country's international competitiveness. In today's globalized economy, the structure of a country's tax code is an important factor for businesseswhen they decidewhere to invest, how much to invest, andwhich types of operations to locate inwhich countries. No longer can a country levy high taxes on business investment and activitywithout adversely affecting its economic performance. In recent years, many countries have recognized this fact and have moved to reform their tax codes to be more competitive. However, others have failed to do so and are falling behind the global movement.
For the Tax Foundation article, go here.

Lastweek, following the sudden announcement by House Speaker John Boehner (R-OH) that hewould be stepping down from Congress at the end of October, Houseways and Means Committee Chairman Paul Ryan (R-WI) and various other Committee members quickly confirmed that the Committeewould continue forwardwith its plans to do international tax reform this year.
For the National Law Review story, go here.

In an 11-page letter to Members of Congress, 24 international tax experts raise significant concerns about legislative proposals thatwould seek to close a six-year funding shortfall in the Highway Trust Fund by taxing $2.1 trillion in U.S. corporate offshore profits at a significant discount thatwould overhaul theway U.S. corporationswould be taxed on their future offshore profits.
For the Americans for Tax Fairness letter, go here.

The Tax Foundation says America's tax code failsin comparison to virtually all other OECD nations. The 2015 International Tax Competitiveness Index ranks the United States an appalling 32 out of the 34 countries in the OECD.with the 3rdleast competitive tax code in the developedworld, only Italy and France have less competitive codes.Donald Trump says hewould change that,withhis version of tax reform.
For the Forbes story, go here.

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)