Int'l Tax News

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)

Labour MP Margaret Hodge,who led the political backlash against tax avoidance is to head a new cross-party group focusing on "responsible" taxation.

The former head of the public accounts committee,who became the scourge of big business in the last parliament,will be joined by other prominent MPs including David Davis, the former Conservative party chairman and Labour's John McFall,who formerly chaired the Treasury committee.
For the Financial Times story, go here.

European Commission President Jean-Claude Juncker faced intense questioning about transparency and Luxembourg tax rulings September 17 at a joint meeting of the European Parliament's Economic and Monetary Affairs Committee and the Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect.
For thewWTD story, go here. (subscription required)

The IRS Large Business and International Division is undergoing sweeping changes designed to streamline enforcement and compliance,which includes a broad organizational change and a new risk identification and compliance program.
For the TNT story, go here. (subscription required)

David Varley, acting director of transfer pricing operations at the IRS, defended recently proposed regulations under section 367 against allegations that legislative history may prevent the IRS from including items such as going concern value,workforce in place, and goodwill as intangibles under section 367(d) guidance.
For the TNT story, go here. (subscription required)

With the exception of provisions regarding discretionary limitation on benefits relief, a panel of PricewaterhouseCoopers LLP practitioners took a generally favorable view of recently released guidance on requesting and obtaining assistance under U.S. tax treaties from the U.S. competent authority.
For the TNT story, go here. (subscription required)

The Netherlands published, on September 15, 2015, proposed corporate tax legislation that addresses the Dutch participation exemption regime, the so-called substantial interest rules, the tax treatment of cooperatives, and transfer-pricing compliance requirements.

The Dutch participation exemption regimewould alignwith changes in the EU Parent-Subsidiary Directive, resulting in taxability of income that may be deducted in foreign jurisdictions (e.g., hybrid loans). The main features of this regimewould remain unchanged.
For the PwC Insight, go here.

The Houseways and Means Committee today approved legislation to extend permanently expired tax provisions for the Subpart F exemption for active financing income, look-through treatment for payments between related controlled foreign corporations (CFCs), and three others. The staff of the Joint Committee on Taxation (JCT) estimates that the five provisionswould increase the federal deficit by approximately $411.4 billion over the ten-year budget period.
For the PwC Insight, go here.

On Thursday, The Houseways and Means Committeewill once again contemplate making permanent controversial tax breaks that overwhelmingly benefit big business at a cost of $380 billion over the next 10 years.
Most notably, the committeewill consider bills making permanent the "active financing" loopholeand theCFC look-through rule. These esoteric names may mean something only to tax policywonks and corporate accounting departments, but their impact on the federal budget has implications for us all.
For the Tax Justice blog post, go here.

Discover how developmentswith the the OECD BEPS projectwill impact the oil and gas industry.
For the ITR story, go here.

Just two days after announcing hewouldn't introduce any new taxes in his 2016 budget, Italian Prime Minister Matteo Renzi said hewould have at least one starting in 2017ÔøΩaweb tax on international Internet companies.
For the DTR story, go here. (subscription required)

Australian Treasurer Joe Hockey introduced legislation into parliament designed to combat tax avoidance by multinational companies, impose stronger penalties and adopt country-by-country reporting requirements.
For the DTR story, go here. (subscription required)

The authors assert that the approach taken by the Organization for Economic Cooperation and Development in its December 2014 draft on risk, recharacterization and special measures could result in allocations thatwould be unlikely to occur in transactions between independent enterprisesÔøΩand that such measures could distort the risk-reward trade-off that the OECD recognizes as fundamental to the proper arm's-length allocation of profit or loss.
For the BNA Insight, go here. (subscription required)

The largest producer of nitrogen-based fertilizer in the United States, CF Industries, is considering mergingwith a Dutch competitor and moving its headquarters overseas to avoid the "double taxation" of profits earned by overseas subsidiaries going to the domestic company.
Curtis Dubay, a tax and economic research fellowwith The Heritage Foundation, says an increasing number of companies are moving to other countrieswith friendlier tax climates, a strategy called corporate inversion.
For the Heartland Institute story, go here.

The Tax Justice Network published a report evaluating the OECD's handbook on the implementation of the new common reporting standard (CRS) on automatic exchange of information, highlighting technicalweaknesses of the CRS and making several recommendations, such as cracking down on sham residency certificates.
For thewWTD story, go here. (subscription required)

The investigation by China's finance ministry that forced a subsidiary of Apple Inc. to pay more than $70 million in back taxeswas part of a bigger probe that portends tougher government measures, officials and advisers for multinational companies said.
For the DTR story, go here. (subscription required)

Momentum is growing slowly, if at all, for the closelywatched innovation box draft unveiled in late July by Houseways and Means Committee members Charlesw. Boustany Jr., R-La., and Richard E. Neal, D-Mass., according to interviewswith tax lobbyists, lawmakers, and congressional aides.
For the TNT story, go here. (subscription required)

On September 1, 2015, the IRS and the Treasury Department issued proposed regulations under Section 956 and temporary and final regulations under Sections 954 and 956. The long-awaited guidance addresses the treatment of loans from a controlled foreign corporation (CFC) to a foreign partnership under Section 956, the treatment of other non-partnership transactions under Section 956, and the foreign personal holding company income (FPHCI) provisions of Section 954.
For the PwC Insight, go here.

On September 8th, a tax reform packagewas presented by the Mexican Executive Branch to its Congress for review and approval. Although the tax reform proposals are not as exhaustive as reforms in prior years, it includes an important requirement to file Master File, Local File and Country-by-Country (CbC) reports. If approved, these provisionswould place Mexico as the fourth country (after Spain, Australia and UK) to require application of the OECD Base Erosion and Profit Shifting (BEPS) initiativewith respect to Action Plan 13: Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting.

For the PwC Insight, go here.

What is BEPS?BEPS stands for the "Base Erosion and Profit Shifting" project. It is scheduled to be completed in December 2015. It is an information sharing regime among participating European tax authorities.
Why is this a threat to U.S. taxpayers?The information being shared is, by and large, targeted at U.S. companies doing business in Europe.
For the Americans for Tax Reform blog post, go here.

A patent box regime can incentivize both domestic and foreign manufacturers to set up manufacturing in a country to take advantage of a lower tax rate on profits derived from intellectual property. Many multi-national companies have relocated intellectual property sourced assets and manufacturing to foreign countrieswithout previously having manufacturing activities in that country related to the intellectual property.
For the IPwatchdog article, go here.

Taxpayers seeking simultaneous appeals of a tax treaty issuewith the IRS should be aware that the ultimate decision-making authority lies notwith the Office of Appeals butwith the Office of Competent Authority, an agency official said.

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

In news analysis, Lee A. Sheppard looks at recently released proposed and temporary regulations that dealwith the use of partnerships to avoid subpart F income.
For the Tax Notes article, go here. (subscription required)

Taxpayers could have a tough time under new proposed rules intended to make it harder for controlled foreign corporations to use loans to foreign partnerships as away to avoid income inclusions under Section 956, practitioners said.

Issued Sept. 1 alongwith temporary rules to shut down specific transactions, the proposed rules are "overbroad," Matthew Chen, a practitioner in the International Tax Services Team at PricewaterhouseCoopers LLP, said Sept. 9 (170 DTR G-5, 9/2/15).

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

Mindy Herzfeld examines the advantages and disadvantages of using a patent box to spur investment in technology and explainswhy U.S. politicians may support a patent box, despite its complexity and economic inefficiency.
For the TNI article, go here. (subscription required)

In economic analysis, Martin A. Sullivan looks at a recent study on the use of formulary apportionment as a replacement for the arm's-length method for transfer pricing.
For the Tax Notes article, go here. (subscription required)

Temporary and final regulations (T.D. 9738) released by the IRS and Treasury September 14 clarify the application of the arm's-length standard and the best method rule under section 482with other tax code provisions.
For the TNT story, go here. (subscription required)

The European Union's antitrust chief plans to handle its probes into countries' tax arrangementswith international companies on a case-by-case basis and not decide on them as a package.

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

The IRS released a package of regulations aimed at attacking "aggressive" tax positions on outbound transfers of intangibles under tax code Section 367.
In final and temporary regulations (T.D. 9738, RIN 1545-BM72) effective Sept. 14, the IRS is clarifying the coordination of transfer pricing ruleswith other sections of the code and regulations, to provide that under the "best method rule," the reliability of a measure "depends on the economics of the controlled transactions, not their formal character."
For the DTR story, go here. (subscription required)

The European banking and financial service industry stepped up its criticism of a financial transactions tax on the heels of a meeting atwhich 11 European Union member states insisted they have narrowed differences on the base for the levy they plan to launch in 2017.

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

An international business group and one of the Big Four accounting firms told the Treasury Department they have serious concerns about proposed changes to the U.S. model tax treaty.
Both the United States Council for International Business and PricewaterhouseCoopers LLP said in separate letters released Sept. 14 that the changesÔøΩin part intended to prevent double non-taxation of income between treaty partnersÔøΩaren't the rightway to address government concerns and might make treaties tougher to negotiate.
For the DTR story, go here. (subscription required)

Kimberly Blanchard ofweil, Gotshal & Mangeswrites that the OECD's draft report on controlled foreign corporation rules for the Base Erosion and Profit Shifting project fails to address issues presented by the use of CFCs. The author says the draft fails to acknowledge the very different role CFC rules play in territorial versusworldwide tax systems and is inconsistent on the extent towhich CFC rules should be designed to discourage foreign-to-foreign profit shifting.
For the BNA Insight, go here. (subscription required)

Since the development of the IRS transfer pricing practice (TPP),whichwas designed to integrate transfer pricing enforcement, practitioners have noted an increase inwhat they see as aggressive and inconsistent administrative tactics by the IRS, often aimed at further developing the IRS's case rather than resolving the issues.
For the TNT story, go here. (subscription required)

Finance ministers from 11 European Union countries hope to break a four-year deadlock on a financial transactions tax proposal through an agreement on the scope of a levy theywant to start phasing in at the end of 2016.
Convening in Luxembourg ahead of a Sept. 12 informal European Union Council of Economic and Finance Ministers meeting, EU diplomats expressed optimism that a deal on the tax base can be reached, provided Spain and Belgium lift their opposition.
For the DTR story, go here. (subscription required)

The Internal Revenue Service issued training materials to its examiners on how to determine the arm's-length price of intangibles assets and services associatedwith the sale of tangible property, in an International Practice Unit.
The unitÔøΩISO/9411.02_04(2014)ÔøΩ outlines several issues for examiners to consider before determiningwhether the transfer of the service or intangible can be included in a sale of tangible property, or must be given a separate priceÔøΩincluding the terms and conditions of its use;whether the transfer pricing study adequately explains its price; andwhether appropriate comparable services or intangibles have been used.
For the DTR story, go here. (subscription required)

The IRS gave its examiners instructions on auditing inbound liquidations in a new international practice unit.
The unitÔøΩISO/9411.08_02(2014)ÔøΩspecifically addresses liquidations of controlled foreign corporations into a U.S. corporate shareholder. Itwas made public Sept. 10 by the Internal Revenue Service's Large Business & International Division.
For the DTR story, go here. (subscription required)

Congressmen Charles Boustany (R–LA) and Richard Neal (D–MA), Members of the Houseways and Means Committee, recently proposed legislation thatwould create an innovation box.In addition to being unsound policy, innovation boxes, in general, are notoriously difficult to implement because of the host of questions the law must answer to prevent abuse and to insure that the box conveys the benefits its authors intend.
For the Heritage report, go here.

A three-day VAT conference attended by business representatives, industry bodies and all 28 EU member states' tax authorities concluded onwednesday 9 September. The discussions have laid the groundwork for future legislative proposals.
For the ITR story, go here.

The European Court of Justice (ECJ) has ruled in favour of multinational IT company Steria in its disputewith France. It could lead to major changes regarding fiscal integration and refunds for some companies.
For the ITR story, go here.