Int'l Tax News

Douglasw. O'Donnell, deputy commissioner (International)with the Large Business and International division of the Internal Revenue Service,will step up to lead the division effective July 10.
Hewill replace outgoing division commissioner Heather C. Maloy,who is leaving the IRS after six years of service, the agency said June 17. During her tenure, Maloy oversaw massive and sometimes contentious changeswithin the division.
O'Donnell comes to the job at an equally tumultuous time, as the IRS struggles to keep pacewith rapidly unfolding developments in the international tax arena driven by the Organization for Economic Cooperation and Development's project to combat base erosion and profit shifting (BEPS). FATCA and BEPS have cranked up theworkload at a timewhen Congress has repeatedly cut the agency's budget.
For the BNA DTR story, go here. (subscription required)

The European Commission presented today an Action Plan to fundamentally reform corporate taxation in the EU. The Action Plan sets out a series of initiatives to tackle tax avoidance, secure sustainable revenues and strengthen the Single Market for businesses.

For the OECD release, go here.

In a further move to make tax systems fairer, more efficient, growth-friendly and transparent, the Commission presented an Action Plan to fundamentally reform corporate taxation in the EU and published a "Top 30" list of tax havens across theworld.
For the European Commission release, go here.

A group of US-listed companies have become the first multinationals towarn investors they could be hit by the UK's new "diverted profits tax".

The technology, luxury goods and insurance groups are the first ofwhat are likely to be dozens of companies to report on their potential exposure to the new levy ÔøΩ dubbed the "Google tax" ÔøΩwhich came into force in April.

For the Financial Times story, go here.

One of Europe's largest companies haswarned that tensions over a planned crackdown on corporate tax avoidance pose a threat to global trade.

Simon Henry, finance chief of Royal Dutch Shell, called for urgent action by political leaders to avoid the fragmentation of global tax rules thatwould lead to uncertainty and double taxation for business.

For the Financial Times story, go here.

Guidance on corporate inversions should be among the IRS's top priorities, the American Bar Association Section of Taxation said.
The section urged the Internal Revenue Service to include regulations on inversions under tax code Section 7874 on its 2015-2016 priority guidance plan. In a letter covering a range of recommendations, the tax section said regulations should address Notice 2014-52,which the IRS issued to curb the cross-border deals in September.
For the BNA DTR story, go here. (subscription required)

Sometimes the news isn'twhat you see - it'swhat you don't see. In this case, the news is two companies that you don't see in the newest iteration of the Fortune 500: Medtronic and Mylan. That's because to its credit, Fortune kicked Medtronic and Mylan off its prestigious list for deserting our country by moving their domicile out of the United States for tax purposeswhile continuing to be run from here.
For thewashington Post story, go here.

Kathryn Horton O'Brien, Nick Raby, Elizabeth A. Sweigart, and Pete Calleja identify the challenges that oil and gas companies soon may face as a result of the OECD's base erosion and profit-shifting project.
For theworldwide Tax Daily story, go here. (subscription required)

Daniel Halperin suggests a new approach to fairness to passthroughs based on his analysis in 2010 that described the actual benefit of reducing corporate rates.
For the Tax Notes viewpoint, go here.

Houseways and Means Chair Paul Ryan, R-Wis., said June 16 that tax issues that Congresswill likely be spending time on for the rest of the year are international tax reform and extenders.
For the TNT story, go here. (subscription required)

The European Commissionwill unveil its latest effort to tackle corporate tax evasionwhen it relaunches legislation for a common, consolidated, corporate tax base (CCCTB).
For the BNA DTR story, go here. (subscription required)

A corporate tax rate cut is looking less and less likely to be on House Republicans' agenda this year. Instead, they're focusing on reviving lapsed breaks and making changes to the international tax system.

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

A report released today by Americans for Tax Fairness (ATF) unveils thatwalmart has built a vast, undisclosedweb of 78 subsidiaries and branches
in 15 offshore tax havens,which may be used to minimize foreign taxeswhere it has retail operations and to avoid U.S. taxes on those foreign earnings.
For the ATF press release and report, go here.

Amanda Athanasiou examines how tax policy and corporate governance drive companies' decisions to invert.

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

Mindy Herzfeld discusses the OECD's recent release on country-by-country reporting and notes that its implementation might be more difficult than it seems, particularly in the United States.
For the Tax Notes International article, go here. (subscription required)

Tom O'Shea reviews Commission v. United Kingdom (Attribution of Gains) (C-112/14), inwhich the European Commission successfully challenged U.K. tax rules that attributed gains made by nonresident close companies to their U.K. resident shareholders on the grounds that such ruleswere incompatiblewith the free movement of capital.
For the Tax Notes International article, go here. (subscription required)

Arturo Tiburcio examines the OECD's VAT/goods and services tax guidelines and concludes thatwhile they are a valuable resource, Mexican tax authorities are not entitled to determine a taxpayer's situation based on the guidelines, and Mexican federal courtswill not take them into account to resolve tax disputes.
For the Tax Notes International article, go here. (subscription required)

Global companies increasingly areworried that the international action plan to fight base erosion and profit shifting isn't taking their concerns seriously, according to a major business association's report.
The Organization for Economic Cooperation and Development currently iswrapping up its 15-item action plan to combat BEPS,which it has beenworking on for two years under a mandate from the Group of 20 countries.
For the BNA DTR story, go here. (subscription required)

The renegotiated tax treaty between South Africa and Mauritius is expected to enter into force and take effect on January 1, 2016. The changes from the current treaty reflected in the new treaty are not significant for South African companies using Mauritius as a gateway for foreign investments.

The changes, however, make Mauritius less attractive as a portal for investment into South Africa, because the new treaty no longerwill provide complete protection against South African interest and royaltywithholding taxes and against capital gains tax (CGT) on the disposal of shares in a company owning South African immovable property.

For the PwC Insight, go here.

US companies have regained their appetite for controversial foreign takeovers that allow them to move overseas and escape US taxes, in spite of awhite House crackdown to restrict so-called tax inversions last year.
For the Financial Times story, go here.

The OECD base erosion and profit-shifting project's draft on profit-split methods appears to place a "thumb on the scale" in favor of those methods, and upcoming revisions might not correct that, according to Chris Bello, branch 6 chief, IRS Office of Associate Chief Counsel (International).
For the TNT story, go here. (subscription required)

An IRS official blasted the most recent Organization for Economic Cooperation and Development discussion draft on the use of a profit split method, claiming that prioritizing the profit split over other methods for a global value chain could lead to "chaos."
For the BNA DTR story, go here. (subscription required)

U.S. support for the OECD draft on hard-to-value intangibles is part of an effort to reach agreement on better rules in the organization'swider revisions to the Chapter VI guidelines on intangibles, according to Brian Jenn, attorney-adviser, Treasury Office of International Tax Counsel.

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

The final report on risk and recharacterizationwill revise the standard for nonrecognition, but governmentswill probably take the drastic step of recharacterizing a transaction only in a limited set of circumstances, Joseph Andrus, former head of the OECD's transfer pricing unit, said June 12.
For the TNT story, go here. (subscription required)

U.S. participation in the OECD's planned country-by-country reporting regimewill be beneficial to U.S. multinationals, Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said June 11.
For the TNT story, go here. (subscription required)

Parties involved in the OECD's base erosion and profit-shifting country-by-country (CbC) reporting project must be mindful of the risk that informationwon't be properly used by tax administrators, according to Douglas O'Donnell, deputy commissioner (international) in the IRS Large Business and International Division.
For the TNT story, go here. (subscription required)

The IRS may require businesses to file their country-by-country reportswith their U.S. tax returns -- three months earlier than the OECD has recommended, a Treasury official suggested June 12.
For the TNT story, go here. (subscription required)

In economic analysis, Martin A. Sullivan proposes an alternative policy choice for lawmakerswhowant to encourage U.S. research and development.
For the Tax Notes article, go here. (subscription required)

While the Organization for Economic Cooperation and Developmentwill continue to refine its latestwork on risk and recharacterization, its members aren't likely to budge soon from their view that heavily capitalized entitiesÔøΩso-called cash boxesÔøΩwill need to demonstrate significant substance to justify high rates of return, an OECD adviser said.
For the BNA DTR story, go here. (subscription required)

A Chinese State Administration of Taxation official has reiterated his 15 compliance "expectations" for multinational enterpriseswith subsidiaries in China.
Liao Tizhong, director general of the SAT's International Taxation Department, said June 12 that the SAT's first expectation is that foreign parents structuring their China subsidiarieswon't engage in base erosion and profit shifting.
For the BNA DTR story, go here. (subscritpion required)

Up-Cs are becoming more exotic and this trend is raising concerns in the government, a Treasury Department official told practitioners.
The use of an Up-C structure has been gaining popularity in recent years because it provides for tax benefits and a higher purchase price for limited liability companies preparing for an initial public offering. The traditional Up-C is straightforward, and an increasing number of these are being structuredwith "added bells andwhistles," Craig Gerson, attorney-adviser in Treasury's Office of Tax Legislative Counsel, said June 12 at a Texas Federal Tax Institute conference.
For the BNA DTR story, go here. (subscription required)

U.S. officials are consideringwhether to require U.S. companies that must file a country-by-country template to do so alongwith their tax returns, according to Brian Jenn, an attorney-adviser in the Treasury Department Office of Tax Policy.
For the BNA DTR story, go here. (subscription required)

When it comes to a new plan to combat international tax avoidance by corporations, it's the United States versus theworld.

For the most part, Big Business, the Obamawhite House and Republican lawmakers are on the same side, battling to keep foreign tax administrators from snatching American money.

For the Politico story, go here.

On 15 May 2015, interested partieswere invited to comment on a revised discussion draft on Action 7 (Prevent the Artificial Avoidance of PE Status) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and now publishes the comments received.
For the OECD release, go here.

Policymakers are still talking about corporate tax reform, but it increasingly seems that the only piece of tax reform that still has a chance for this Congress are changes to our system of international taxation.
This is partly because the problemswith our current international tax regime, like corporate inversions and the disincentive to repatriate foreign earnings, have gotten a lot of attention. It's also because lawmakers continue to hold out hope that international tax reform is away to pay for the perennial shortfalls of the Highway Trust Fund (HTF).
For the Taxpayers for Common Sense article, go here.

Senate Majority Leader Mitch McConnell (R-KY) lastweek said in an interviewwith Reidwilson of Politicowhat many both inside and outside ofwashington have been unwilling to admit to themselves or anyone else: A comprehensive tax reform plan isn't going to happen this year.

McConnell said reformwouldn't happen "with this president," that is, not until 2017, or at least two years from now.

But McConnellwas actuallyway too optimistic. The soonest comprehensive tax reformwill occur is 2019, twice as long as McConnell's quote leads you to believe.

For the Forbes article, go here.

On 8 June 2015, the OECD released a "Country-by-Country Reporting Implementation Package." The package includes model legislation the OECD suggests could be used by countries to mandate filing of country-by-country reports (CbCRs). The model legislation does not attempt to address the filing of the so-called master file or local file reports. The implementation package also includes three model competent authority agreements that could be used by each country, depending on how it intends to effect exchange of CbCRs.
For the PwC Tax Policy Bulletin, go here.

The European Commission (EC) has published in its Official Journal a notification about its investigation intowhether Belgium's excess profit tax ruling system constitutes state aid and has ordered Estonia and Poland, alongwith 15 other member states, to provide more information on their tax ruling practices.
For the International Tax Review story, go here.

The U.S. thinks that in the event of a fixed ratiowithin the OECD's BEPS action on interest deductions, it is appropriate to use a 10 percent earnings before interest, taxes, depreciation, and amortization limit on interest deductions, even if one-third of companieswouldwant to rely on a groupwide ratio, a Treasury official said June 11.
For the TNT story, go here. (subscription required)

At the June 11 OECD International Tax Conference inwashington, practitioners joined tax officials to discuss action 6 (prevention of treaty abuse) of the OECD base erosion and profit-shifting project.
For the TNT story, go here. (subscription required)

On June 11 tax practitioners representing multinationals learned thatwhat gets discussed at Australian barbecues matters to the rest of theworld.
For the TNT story, go here. (subscription required)

U.S. and U.K. delegates to the OECD's Committee on Fiscal Affairs differ on the extent towhich the international project to combat base erosion and profit shifting should be judged a success.
Robert Stack, the U.S. deputy assistant treasury secretary for international tax affairs, said June 10 that "the U.S. is extremely disappointed in the output, and our collective failure in the BEPS project to do more, and to do betterwork thanwe have done."
For the BNA DTR story, go here. (subscription required)

The question ofwhat constitutes a "special tax regime"will continue to be a big issue aswork goes forward on stopping treaty abuse under the OECD's base erosion and profit shifting project, Treasury officials and practitioners said.

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

The divergentways different countries implement proposals from the OECD's base erosion and profit-shifting projectwill pose a big challenge for policymakers, and governmentswill have to cooperate to avert complete chaos in a post-BEPS projectworld, panelists said June 11 at the OECD International Tax Conference inwashington.
For the TNT story, go here. (subscription required)

Tax officialswith the U.K. and South Africa said the U.S.'s departure from the Organization for Economic Cooperation and Development's Base Erosion and Profit Shifting project undermines its implementation from recommended policy to practical law.
For the BNA DTR story, go here. (subscription required)

An international economic development body has published proposed changes to how interest payments are taxed to combat the artificial shifting of profits by multinational companies.

For the Out-Law.com article, go here.

BIAC continues to support the G20 mandated Base Erosion and Profit Shifting (BEPS) project, and has always sought to provide constructive and detailed input
from the international business community across the full spectrum of OECD's Action Items. As the project enters its final phase, BIAC is releasing its BEPS Position Paper detailing specific concerns of the business community over the full range of BEPS Actions.
For the BIAC position paper, go here.

The implementation package has brought country-by-country reporting closer for taxpayers.
For the International Tax Review story, go here.

The concept of "moral hazard" is likely to disappear from the Organization for Economic Cooperation and Development's revised guidelines on risk and recharacterization, a former OECD official said June 10.

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

Interest in patent boxes remains strong as a potentially viable option on Capitol Hill as lawmakers continue theirwork on tax reform, Joint Committee on Taxation Chief of Staff Thomas Barthold said.
The issue has been highlighted by the Organization of Economic Cooperation and Development's base erosion and profit shifting project,which has dealtwith the issue of patent boxes, and the question of "modified nexus" that accompanies the concept, among a broad range of issues.
For the BNA DTR story, go here. (subscription required)