Int'l Tax News

Harvey Poniachek of Rutgers Business School looks at the impact that the OECD's base erosion and profit shifting project could have on transfer pricing practices of multinational enterprises, particularlywith respect to intangibles.
For the BNA DTR Insight, go here. (subscription required)

Offshore company formations continued ticking upward last year,with growth more dramatic in some jurisdictions than others, according to data compiled by a company that provides offshore legal services.
For the BNA DTR story, go here. (subscription required)

Businesses pushing against patent boxes should cool their heels, said a lawmaker putting together such a plan.
Rep. Charles Boustany Jr. (R-La.) said businesses shouldwait to see his bill before blasting the tax breaks.
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The Internal Revenue Service isn't backing down from the tough hurdles companies have to meet to prove their business activities in foreign countries are substantial.
Practitioners said the largely unchanged 25 percent bright-line test in rules issued June 3 under tax code Section 7874will be difficult to meet for companieswith business around the globe and likely are a sign that the government is continuing its crackdown on inversions.
For the BNA DTR story, go here. (subscription required)

India raised the rate of its service tax from 12.36% to 14% on Monday, inwhat is seen as a stepping stone for the introduction of its country-wide GST in April 2016.
For the International Tax Review story, go here.

A powerful business lobby is sounding thewarning to lawmakers about a global effort to crack down on offshore tax evasion.
The National Association of Manufacturerswarned the top congressional taxwriters that the so-called Base Erosion and Profit Shifting project "could have a negative impact on the global competitiveness of companies in the United States and threaten the jobs of U.S.workers."
For The Hill story, go here.

An international campaign to stamp out corporate tax dodgingwill fail and G20 leading economies should instead adopt a global minimum tax rate for multinationals, a coalition of 10 charities and human rights bodies said.
For the Reuters story, go here.

The Silicon Valley Tax Directors Group, representing 67 high-technology companies, has asked the OECD to delete a key provision of the organization's recent draft on cost contribution arrangements.
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Eliminating a tax benefit tied to overseas investmentwould pay for reintroduced legislation to boost domesticwages and benefits, said one of the bill's chief sponsors, Senate Minoritywhip Dick Durbin (D-Ill.).

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Sweeping proposals to tackle the "broken" system of taxing companies' profits through a radical shake-up of the rules and a global minimum corporate tax rate have been put forward by an international panel of development experts.

The panel called for a fundamental overhaul of the global tax system by adopting a scheme called "formulary apportionment"which involves using a formula to carve up profits between the countrieswhere multinationals operate.

For the Financial Times story, go here.

International Tax News is designed to help multinational organisations keep upwith the
constant flow of international tax developmentsworldwide.

For this month's issue, go here.

Patent boxesÔøΩtax breaks for research and development that are ubiquitous in EuropeÔøΩmay be making theirway across the Atlantic.
Almost overnight, andwith an abruptness that has taken many staffers by surprise, patent, intellectual property or "innovation" boxes have become the focus in congressional debates over how to overhaul the U.S. tax system.

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On 29 April 2015, the OECD invited comments from interested parties on adiscussion drafton revisions to Chapter VIII of the Transfer Pricing Guidelines on Cost Contribution Arrangements. Thiswork relates to Action 8 of the BEPS Action Plan.
The OECD is grateful to the commentators for their input, and now publishes the comments received.
For the comments, go here.

Amazon made headlines around theworld thisweekwhen it announced that itwould change theway it accounts for revenue from retail sales in Europe. Under the new arrangement, Amazonwill book all revenue from retail sales in individual countries in those countries, rather than routing the profits through Luxembourg,which has the lowest corporate tax rate in the European Union.
Consider this the first inwhatwill soon become a rapid succession of major tax policy shifts among multinational corporations operating in Europe. The cause? In aword: BEPS.
For the Forbes article, go here.

Key taxwriters in Congress are indicating that once Congress disposes of pending trade legislation, theywill turn to their top legislative priority: reaching a consensus on international and business reform by the end of the summer.
In recentweeks, a major concept has emerged in tax reform discussions: the establishment of a patent or innovation box.
For the JD Supra Business Advisor article, go here.

Manal Corwin is the National Leader of the International Tax practice of KPMG LLP and Principal in Charge ofwashington National TaxÔøΩInternational Tax Policy. She is the former Deputy Assistant Secretary for International Tax Affairs in the Office of Tax Policy at the U.S. Treasury Department.
In this interviewwith the Tax Foundation, Ms. Corwin examines how the profit shifting phenomenon is changing the global tax landscape andwhat that means for the business community and for governments. In addition, Ms. Corwin highlights the benefits and possible implications of increased cooperation from aworldwide and U.S. perspective.
For the Tax Foundation interview, go here.

Recently published draft amendments of the Personal Income Tax (PIT) and Corporate Income Tax (CIT) acts introduce a number of new transfer pricing (TP) documentation requirements. These changeswill have a significant impact on taxpayers undertaking related party transactions.

For the PwC Insight, go here.

On 22 May 2015, the Organisation for Economic Co-operation and Development (OECD) released a revised discussion draft in connectionwith the follow upwork on Action 6 on the prevention of treaty abuse under the Base Erosion and Profit Shifting (BEPS) Action Plan.

For the EY Global Tax Alert, go here.

The value-based approach to services contributed to a cost contribution arrangement described in the OECD's discussion draft on action 8 of the base erosion and profit-shifting project is a departure from existing OECD transfer pricing guidelines, the Tax Executives Institute said in comments submitted May 28.
For the TEI comments, go here.

The "Irish double and Dutch sandwich" tax arrangement came under intense scrutinywhen a special European Parliament tax committee visited Ireland and the Netherlands as part of its probe into tax rulings offered to multinational companies.

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In economic analysis, Martin A. Sullivan discusseswhy a patent box is a less efficientway to provide incentives for research than a corporate rate cut or an expanded research credit.
For the Tax Notes story, go here. (subscription required)

In news analysis, Ajay Gupta examines two recent decisions from the U.S. Supreme Court and the Court of Justice of the European Union striking down discriminatory tax practices, and faults both courts for failing to delineate the proper limits of tax sovereignty.
For the Tax Notes story, go here. (subscription required)

There are many good reasons to undertake corporate tax reform this year.
For the Forbes article, go here.

Work on the development of the Multilateral‎ Instrument to implement the tax treaty-related Base Erosion and Profit Shifting (BEPS) Action Plan began on 27 May 2015 in Paris.

For the OECD release, go here.

The lack of clarity over the U.S.'s participating status in the OECD's common reporting standard (CRS) should not lead to its treatment as a nonparticipating jurisdiction for purposes of the look-through rules, a Treasury official said May 28.
For the TNT story, go here. (subscription required)

This month's special International Tax Review feature looks at challenges tied to implementing BEPS measures into domestic law.
For the ITR article, go here.

David Bradbury, head of the tax policy and statistics division at the OECD Centre for Tax Policy and Administrationwho is overseeing this aspect of the project, provides exclusive insight into an action point that has not always received as much attention as other items in the Action Plan.
For the International Tax Review story, go here.

The EU has relaunched a plan for a bloc-wide common corporate tax base to combat multinational tax avoidance. But the proposal is liable to trigger concern in countries such as the UK and Ireland.

For the Financial Times story, go here.

Work on the development of the Multilateral‎ Instrument to implement the tax treaty-related Base Erosion and Profit Shifting (BEPS) Action Plan began on 27 May 2015 in Paris. As per the OECD/G20 mandate, the ad hoc Group thatwill complete thework under Action 15 has been established,with over 80 countries participating.
For the OECD release, go here.

Multinational pharmaceutical companies face a joint investigation by tax agencies from several countries and could also be asked to testify before an Australian Senate inquiry into corporate tax avoidance.

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

France annually loses an estimated 10 percent of corporate tax revenue to multinational companies' "manipulation" of transfer pricing to shift profits to low-tax jurisdictions, according to a report by a Banque de France economist.

For the BNA DTR story, and a link to theworking paper, go here. (Subscription required)

The OECD has updated the commentaries on the Model Tax Convention (Commentaries) seeking to clarify the concept of beneficial ownership in tax treaties. But, a Swiss Federal Supreme Supreme Court dispute, known as the 'Swiss swap' case, threatens to challenge the OECD's principles.
For the International Tax Review story, go here.

The Treasury Departmentwill have several questions to considerwhen determiningwhether the U.K.'s recently enacted diverted profits tax (DPT) is creditable for U.S. foreign tax credit purposes, according to Harrison Cohen of Deloitte Tax LLP.
For the Tax Notes article, go here. (subscription required)

As the European Commission pushes to establish a cross-border corporate tax scheme for the digital age, itwill insist that a revised common consolidated corporate tax base (CCCTB) be mandatory and contain a two-step approach to prevent corporate profit shifting.

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

The College of Commissioners today held an orientation debate on measures to make corporate taxation fairer, more growth-friendly and transparent. Itwas agreed that a new EU approach to corporate taxation is needed to successfully address tax abuse, ensure sustainable revenues and foster a better business environment in the internal market.
For the EC press release, go here.

Amazon is changing its EU business structure so that it books retail sales in the U.K. and other EU jurisdictions instead of in Luxembourg, an Amazon spokesman confirmed May 26.

For the Tax AnalystswTD story, go here. (subscription required)

The European Commissionwarned on Tuesday that Amazon's decision to report its sales morewidely across Europewould have no bearing on a landmark probe into the online retailer's tax arrangements in Luxembourg.

This month Amazon overhauled its much-criticised tax structure in the EU, raising expectations that itwill now pay more tax in Germany, Spain, Italy and the UK.

For the Financial Times story, go here.

Ukrainian authorities have approved revisions to the country's tax code that provide new profit tax breaks for overseas investors.
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The European Unionwill press for countries in the bloc to align their corporate tax bases as part of efforts to overhaul a long-stalled proposal, according to a document prepared for May 27 discussions.
The document doesn't call for EU nations to adopt the same tax rates. Instead, the European Commission aims to make it harder for companies to dodge taxes by aligning theway governments definewhat to tax.
For the BNA DTR story, go here. (subscription required)

Amazon.com Inc. has stopped booking European retail sales largely through its affiliate in low-tax Luxembourg, but thatwon't necessarily translate into a revenuewindfall for the U.K. and other countrieswhere it is now reporting the sales, experts in international taxation told Bloomberg BNA.

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

Under a mandate from the G20 leaders, Mr. Saint-Amans is directing one of the most significant transnational efforts in the history of international taxation, the OECD's Base Erosion and Profit shifting (BEPS) project. Regardless of the final recommendations presented at the G20 meeting in October of this year in Lima, Peru, the BEPS initiative is transforming the landscape of international taxation, redefining the international tax arena for host countries, residence countries, and multinational firms, alike.
For the Tax Foundation article, go here.

Scott Heidecke and Flora Luo of Nexia International member firm Nexia TS (Shanghai) discuss China's latest attempts to implement countrywide standard practices for application of the general anti-avoidance rules,while bringing clarity to foreign entitieswhich are affected.
For the International Tax Review story, go here.

Mindy Herzfeld argues that unless the OECD can properly define a country's tax base, it cannot adequately measure base erosion.
For the Tax Notes International story, go here. (subscription required)

This articlewill address the questionwhether publicly traded US corporations owe a duty to their shareholders to minimize their corporate tax burden in anyway that they may be able to get awaywith from a purely legal perspective. First, however, to render the subsequent discussion a bit more concrete, Iwill describe a recently unveiled case study of corporate tax aggressiveness.
For the paper, go here.

Amazon has started to pay taxes on sales to its UK customers in Britain rather than in Luxembourg, in a climbdown after accusations that it avoided tax in its third largest market.

Amazon's low tax structure,which has sparked intense controversy in the last three years,was overhauled at the beginning of this month and the company is making similar moves elsewhere in Europe.

For the Financial Times story, go here.

It has become a $2 trillion question.why don't companies have to make clear exactly how much of their profits are generated offshore each year and not taxed in this country?why must investors engage in jujitsu to estimate these figures and the risks associatedwith them?
For the New York Times story, go here.

In the continuing battle between European and American tech companies, score one for Europe.
In a move that could put pressure on its rivals to follow suit, Amazonwill start paying taxes in a number of European countrieswhere it has large operations, instead of funneling nearly all its sales through Luxembourg, a low-tax haven that is the home base in the region for Amazon and many other large tech companies.
For the New York Times story, go here.

In a revised discussion draft released May 22 on action 6 (preventing treaty abuse) of its base erosion and profit-shifting project, the OECD proposed putting a "skeletal" limitation on benefits article in its model treaty thatwould be supplemented by guidance in its model commentary, in lieu of a fully drafted provision.
For the TNT story, go here. (Subscription required)

In news analysis, Lee A. Sheppard looks at the reality behind the idea that multinationals are storing cash overseas because of U.S. tax law.
For the TNT article, go here. (Subscription required)

In news analysis, Marie Sapirie says that important questions remain regarding regulations under sections 959 and 961 and that there is renewed practitioner interest in the guidance project.
For the TNT article, go here. (subscription required)