Int'l Tax News

A new draft on the prevention of treaty abuse from the Organization for Economic Cooperation and Development includes a "simplified" limitation on benefits rule,which the guidance says should be pairedwith a "principle purpose test" rule.
For the BNA DTR story, go here. (subscription required)

Dr. Jack Mintz of the University of Calgary offers his latest thinking on the profit shifting phenomenon, sharing his unparalleled insight into the Canadian experiencewith taxing multinational firms.
For the Tax Policy Blog interview, go here.

Public comments are invited on a revised discussion draftwhich includes proposals on how to dealwith the follow-upwork on Action 6 (Prevent Treaty Abuse) of the Action Plan on Base Erosion and Profit Shifting (BEPS).

For the OECD release, go here.

The G20 International Tax Symposiumwas held in Istanbul on 6-8 May 2015. Hosted by the Turkish Ministry of Finance, the symposium included 300 participants from governments, international organisations, business and industry, non-governmental organisations and academia from 60 countries.

The symposium provided a platform to discuss the ongoing OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan. It included tax matters and issues relevant to developing countries and how they might benefit from the OECD/G20work on international taxation and other related items.

For the PwC Tax Policy Bulletin, 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.

Poland has released a draft regulation updating documentation requirements for transfer pricing and implementing the Organization for Economic Cooperation and Development's soon-to-be-finalized country-by-country reporting rules, according to an alert from EY.

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

The Treasury Department's proposed changes to the U.S. model tax treatywould, if implemented, represent the most dramatic changes in U.S. tax treaty policy in decades, according to some practitioners.
For the TNT story, go here. (subscription required)

The international tax regime is facing a defining moment. As stories of multinational companies expatriating and shifting income around theworldwith seeming impunity continue to emerge, the question of how to divide the international tax base among the countries of theworld increasingly draws attention from policymakers and academics. To date, however, the debate has tended to devolve into one over the two traditional tools used to divideworldwide tax base ÔøΩ transfer pricing and formulary apportionment. This Article demonstrates that such focus is misplaced on the instruments of dividing theworldwide tax base rather than on first principles. Instead, this Articlewill adopt the first principle of maximizing the efficiency of theworldwide tax regime under two key, but realistic, assumptions: first, that the presence of multiple states in theworld is efficient and, second, that there is a declining marginal utility to public goods. Under these assumptions, dividingworldwide tax base efficiently requires balancing the goals of maximizing the neutrality of tax laws and the provision of public goods across all countries.
For the paper, go here.

The Indian government presented the annual India Budget through Finance Bill 2015 (Finance Bill) on February 28, 2015. Both Houses of Parliament have approved the Finance Billwith certain amendments, and the amended bill has received presidential assent. Therefore, the proposals are now effective.

For the PwC Insight, go here.

On May 20, 2015, the US Department of Treasury released proposed revisions to the US model income tax convention. Treasury has requested comments from the business community and other interested stakeholderswith respect to these proposalswithin 90 days.

For the PwC Insight, go here.

Today, the Treasury Department released for public comment draft updates to the U.S. Model Income Tax Convention (the "U.S. Model") ÔøΩ the baseline text used by the Treasury Departmentwhen it negotiates tax treaties. The revisions to the U.S. Model text are intended to ensure that the United States is able to maintain the balance of benefits negotiated under its treaty network as the tax laws of our treaty partners change over time, and to deny treaty benefits to companies that change their tax residence in an inversion transaction. The U.S. Modelwas last updated in 2006.

For the Treasury press release, go here.

Authoritiesworldwide have increased scrutiny of tax-avoidance strategies in the past year, CFOs and finance directors of multinational clients told global tax consulting firm network Taxand.
For the CGMA magazine story, go here.

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 OECD has released its revised proposals on the Permanent Establishment (PE) rules in Article 5 of the OECD Model Tax Treaty. The earlier OECD proposals,which set out alternative approaches to a number of significant PE issues, have been replaced by a set of definitive proposalswhich are largely focused on expanding the scope of the dependent agent rule (including narrowing the scope of the independent agent rule) and narrowing the scope of the specific activity PE exemptions.


For the PwC Tax Policy Bulletin, go here.

The European Commission's ambitious plans to improve the digital single market include changes to the VAT treatment of the cross-border supply of goods and services.
For the International Tax Review story, go here.

Australian Treasurer Joe Hockey used his annual Budget speech to announce the introduction of Australia's 'Netflix tax' on the cross-border supply of e-commerce goods and services.
For the International Tax Review story, go here.

Andrus Ansip, European Commission vice president for the digital single market, has committed to have a proposal in place for an EU-wide VAT threshold on business-to-consumer (B2C) e-services by the summer.
For the International Tax Review story, go here.

Although European politicians have complained that U.S.-based companies are taking advantage of loopholes in foreign countries' tax laws to reduce their liability, foreign companies operating in the U.S. also benefit by paying lower taxes than their American counterparts, according to a May 18 policy brief by the Progressive Policy Institute (PPI).

For the PPI policy brief, go here.

The Treasury Department on May 20 proposed sweeping changes to the model U.S. tax treaty, including limiting the availability of treaty benefits for taxpayers that benefit from special tax regimes and imposing full U.S.withholding tax rates on inverters.

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

The European Commissionwill study possible compromises on an 11-nation financial transactions tax plan, spokeswoman Vanessa Mock said.

Finance ministers narrowed the range of proposals on the table lastweek in Brussels,without settling on a final plan.

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

The Treasury Department's May 20 release, for public comment, of proposed changes to the U.S. Model Income Tax Convention are designed to have an impact on thework of the international project on base erosion and profit shifting, a Treasury official said.

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

An international project to combat base erosion and profit shifting isn't likely to produce minimum standards for rules on controlled foreign corporations, according to the U.S. delegate to the Organization for Economic Cooperation and Development's Committee on Fiscal Affairs.

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

Policy makers should prepare for big shifts of companies' taxable profits and economic activity to source-taxation countries, spurred by possibly uncoordinated tax and transfer pricing rule changes growing out of the international action plan to combat base erosion and profit shifting (BEPS), a business practitioner said.

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

The Organization for Economic Cooperation and Development is considering establishing a compliance framework that countries could share as theywork toward implementing the common reporting standard, an OECD adviser said.

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Calling it "the hot idea" right now in Congress, Thomas Barthold, Joint Committee on Taxation chief of staff, on May 18 highlighted the challenges facing the construction of any patent or innovation box.

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

Data gathered through country-by-country reporting under action 13 of the OECD's base erosion and profit-shifting project may be better than existing data butwon't be enough to give a full picture of the size and scope of BEPS, stakeholders said during a May 18 public consultation on action 11 of the project on improving BEPS analysis.

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

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

Chile's internal tax service, Servicio de Impuestos Internos, has clarifiedwhen loans to related companies outside of Chilewill be considered awithdrawal of profits and hence subject to income tax.

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

The Organization for Economic Cooperation and Development has chosen its proposed "option B" to rewrite the permanent establishment rules on commissionaire structures.

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

The OECD on May 15 revealed its preferred options on action 7 (preventing the artificial avoidance of permanent establishment status) in a revised discussion draft released as part of its base erosion and profit-shifting project.

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

Public comments are invited on a new discussion draftwhich includes proposals resulting from thework on Action 7 (Prevent the Artificial Avoidance of PE Status) of the Action Plan on Base Erosion and Profit Shifting (BEPS).
This new discussion draft reflects the proposals that resulted from thatwork and onwhich comments are now invited. Comments should be sent by 12 June 2015 at the latest (no extensionwill be granted) and should be sent by email to taxtreaties@oecd.org inword format (in order to facilitate their distribution to government officials). They should be addressed to Marlies de Ruiter, Head, Tax Treaties, Transfer Pricing and Financial Transactions Division, OECD/CTPA.
For the OECD release, go here.

Pascal Saint-Amans has emphasised the urgency of fixing the flaws in the international tax system.
For the International Tax Review story, go here.

Omar Moerer and Benchi Klaver of Baker & McKenzie Amsterdam examine the draft guidance on preventing the artificial avoidance of permanent establishment status issued by the Organization for Economic Cooperation and Development in October 2014, aswell as other drafts issued under its project to combat base erosion, concluding that the authorized OECD approach at least provides some certainty about the amount to be allocated to a PE in the event one is triggered.
For the BNA Insight, go here. (subscription required)

Multinational tech companies have been "extremely aggressive" and "pushing the boundaries ofwhat is legal"when it comes to their tax affairs and should be more conservative in their tax planning, Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, said May 14.
For the TNT story, go here. (subscription required)

The Australian Government's 2015/16 Federal Budget released on 12 May contained several measures targeted at multinationals.

For the PwC Insight, go here.

Making Sense of Profit Shifting is the 2015 and inaugural edition of Tax Foundation Forum, an annual interview series that aims to advance and cultivate a more informed discussion of a tax policy topic.
With its focus on the profit shifting phenomenon, this year's edition of Tax Foundation Forum seeks to make sense of an issue that has significantly influenced the international tax debate aswell as the U.S. corporate tax reform debate.
For the Tax Foundation release, go here.

In a speech on Tuesday in New Hampshire, Chris Christie, New Jersey's governor and a possible presidential candidate, used a comparison to North Korea to attack the United States' system ofworldwide corporate taxation. The federal government subjects American companies to American taxes (at least in theory) on their entire global profits.
"As it stands now America is among a tiny handful of nations, including North Korea, that has a system that taxes profits twice," Mr. Christie said. "None of our largest trading partners do this. None of them. They all have a territorial system like the one I'm suggesting."
Mr. Christiewaswrong. In fact, two of our largest trading partners (Mexico and South Korea) also levyworldwide corporate income taxes. So do three other members of the Organization for Economic Cooperation and Development: Israel, Ireland and Chile.
For the New York Times story, go here.

Technology companies need to stop "extremely aggressive" tax planning, the man chargedwith reforming global tax rules has told the BBC.
Pascal Saint-Amans,who runs the OECD's Centre for Tax Policy, said that new standardswould require companies to pay more tax in the countrieswhere they sold goods or created revenues.
For the BBC News story, go here.

The Australian government in its 2015-16 budget announced itwill implement the Organization for Economic Cooperation and Development's guidance on documentation and country-by-country reporting under its action plan on base erosion and profit shifting.
For the BNA DTR story, go here. (subscription required)

Australia's federal budget, released May 12, provided generous tax breaks for relatively small companies,while singling out large global businesseswith double-strength penalties.
For the BNA DTR story, go here. (subscription required)

The Australian 2015-2016 federal budget contains a number of new measures designed to enhance the integrity of the Australian tax system. The measureswould counter tax avoidance by multinationals and introduce a goods and services tax (GST) on the importation of digital products and services into Australia.

For the PwC Insight, go here.

The Organization for Economic Cooperation and Development's proposed indicators for judging the effectiveness of measures designed to combat base erosion and profit shiftingwill be ineffective in estimating the scale of BEPS, according to an Oxford University professor.

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

A proposal under the international action plan on base erosion and profit shifting to strengthen controlled foreign corporation rules by treating most intellectual property income as passive fails to reflect how some business sectors use IP, practitioners said.

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

On 16 April 2015, interested partieswere invitedto comment on the discussion draft on Action 11 (Data Analysis) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and is now publishing the comments received.
For the comments, go here.

The European Commission's ambitious plans to improve the digital single market include changes to the VAT treatment of the cross-border supply of goods and services.
For the International Tax Review story, go here.

Australia's treasury department released draft legislation proposing to extend the country's goods and services tax (GST) to digital products and services supplied from offshore entities.
"[I]t is unfair that overseas based businesses selling services into Australia may not charge GSTwhen local businesses have to charge GST," Treasurer Joe Hockey told parliamentwhile delivering the government's annual budget proposals.
For the BNA DTR story, go here. (subscription required)

Countries need more time towrite consensus rules on controlled foreign corporations, member of the OECD's Business and Industry Advisory Committee said.
William Morris, chairman of the advisory committee's tax group and director of global tax policy for General Electric, said May 12 that it is clear from the OECD's recent discussion draft on strengthening CFC rules "that there is not a level of consensus,whichwill not enable you to put out meaningful recommendations in any period of time."
For the BNA DTR story, go here. (subscription required)

The corporate community is increasingly sounding thewarning to Congress: Europe is coming after us on taxes.

With tax reform talks stumbling inwashington, the fear for corporate titans is that other countries are already implementing a global set of recommendations meant to crack down on offshore tax avoidance.

For the Hill story, go here.

Ken Brewer argues that language in the Court of Federal Claims' Intersport opinion supports awidely held misconception that reg. section 1.482-1(a)(3) prohibits taxpayers from filing any late or amended returns to claim reductions in taxable income resulting from related-party transactions.
For the Tax Notes report, go here. (subscription required)

Gabe B. Gartner argues that until the treatment of tax basis in outbound transfers of intangible property is clarified by regulations or other guidance, taxpayers shouldn't assume that their tax basis is irrecoverable.
For the Tax Notes viewpoint, go here. (subscription required)