Int'l Tax News

Corporations in the UKwill soon be guilty of a new offence if they fail to prevent their advisers from committing criminal tax evasion.
For the ITR story, go here.

The Australian government released, on July 14 2015, the terms of reference for the Board of Taxation's (BoT) consultation on implementing the OECD's anti-hybrid rules.

For the PwC Insight, go here.

The U.S. system of taxing multinational corporations' earnings encourages companies to direct more investment abroad, either in reality or on paper. The fact that the earnings of the foreign subsidiaries of U.S. corporations are not taxed until they are officially transferred to the domestic parent company leads to an incentive to "permanently reinvest" funds in low-tax jurisdictions and indefinitely defer paying U.S. taxes. This incentive has resulted in multinationals parking huge sums of profits in tax havens (such as Luxembourg, Bermuda, and the Cayman Islands). This report explains and compares several proposals to address this issue, including a repatriation holiday, deemed repatriation, and ending the deferral of taxes on U.S. multinational corporations' foreign earnings.
For the CTJ report, go here.

The ongoing saga of tax reform is reminiscent of the classic 1957 movie "The Incredible Shrinking Man." After a hapless businessman is exposed to a variety of hazards, he shrinks ever smaller, eventually becoming imperceptible to the naked eye.
The sequel now playing on Capitol Hill is creating great peril for our economy. Earlier this year, therewas great enthusiasm in Congress for comprehensive tax reform. But this "comprehensive" reform quickly shrank to the less daunting goal of "business" reform and then an even less ambitious push for "international" reform. Now there's talk that reform may be limited to just trying to pass a handful of permanent tax extenders.
For The Hill story, go here.

Developing nations and advocacy groups at a United Nations conference in Ethiopia are pushing for a new global body to tackle tax avoidance by companies, a move opposed by richer nations.
For the Bloomberg Business story, go here.

During the July 6-7, 2015 public consultation on BEPS Actions 8 through 10, the OECDworking Party 6 announced planned revisions to its proposed changes to the Transfer Pricing Guidelines, including its December 2015 papers on Risk, Recharacterisation and Special Measures and Use of Profit Split Methods and its 2014 draft on Intangibles. The OECD also received feedback from speakerswho had submittedwritten comments to the drafts on Cost Contribution Arrangements and Hard to Value Intangibles (proposed changes to Chapter VI of the Transfer Pricing Guidelines on Intangibles). In providing the updated status of the various transfer pricingworkstreams, the OECD also confirmed the delivery timetable for the transfer pricingwork.

For the PwC Insight, go here.

The European Commission tried to reduce tensionwith the Organization for Economic Cooperation and Development over a list of 30 countries and independent territories the European Union has designated as tax havens by insisting it is not trying to competewith or impede thework of the Paris-based institution.
For the BNA DTR story, go here. (subscription required)

The IRS is open to expanding the list of troublesome foreign splitter transactions set out in final rules under tax code Section 909, but has no immediate plans to do so, an agency official said.

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

Multinational enterpriseswill "always be ahead of the curve" in beating the tax rules in developing countries, so global governance and social responsibility standards should includeways to stigmatize tax avoidance, a U.N. official said July 14.
For thewWTD story, go here. (subscription required)

The OECD'swork on Chapter I of the transfer pricing guidelines is moving in the right direction, but questions remain on the level of substance necessary to recognize a transaction, according to Clark Chandler of KPMG LLP.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on a July 14 discussion of the final foreign tax credit splitter rules at an International Tax Institute luncheon in New York.
For the TNT story, go here. (subscription required)

The Center for Freedom and Prosperity, joined by 20 other business advocacy organizations,warned Congress that thework of the international project to combat base erosion and profit shifting lacks oversight.
In a July 14 letter to both houses of Congress, CF&P President Andrew Quinlan said his organization and the other groupsÔøΩwhich the letter collectively referred to as the Coalition for Tax CompetitionÔøΩare deeply concerned that the BEPS process "will result in onerous new reporting requirements and higher taxes on American businesses."
For the BNA DTR story, go here. (subscription required)

George Osborne, UK chancellor of the exchequer, made himself unpopularwith the funds industry by closing loopholes that helped managers avoid full capital gains tax on carried interest, or their share of a fund's profits.
For the ITR story, go here.

A proposed Greek 26% transaction tax,which has caused concern and uncertainty for businesses in Bulgaria, Cyprus and Ireland, is being scrutinised by the European Commission (EC),whichwill convene a meetingwith the parties concerned and provide its opinion on August 18.
For the ITR story, go here.

In an increasingly globalizedworld, the design of international tax systems in terms of taxation on foreign corporate incomes has received much attention from policymakers and economists alike. In the past, Japan'sworldwide tax system taxed foreign source income upon repatriation. However, to stimulate dividend repatriations from Japanese-owned foreign affiliates, Japan introduced a foreign dividend exemption in 2009 that exempts dividends remitted by Japanese-owned foreign affiliates to their parent firms from home taxation. This paper examines the effect of this dividend exemption on profit repatriations by Japanese multinationals. The authors find that the response of Japanese-owned affiliates to the dividend exemptionwas heterogeneous.
For the paper, go here.

As part ofwhat experts call awar on tax competition and low taxes, a coalition of high-tax governments from around theworld isworking to erect a radical new planetary taxation regime thatwould further smotherwhat remains of financial privacy and national sovereigntywhile seriously harming the global economy.
For the New American story, go here.

The OECD and the United Nations Development Programme on July 13 launched Tax Inspectorswithout Borders, a joint initiative offering targeted tax audit assistance to developing countries.
For thewWTD story, go here. (subscription required)

In news analysis, Marie Sapirie discusses the benefits of binding arbitration as a means of resolving treaty disputes.
For the Tax Notes article, go here. subscription required)

Developing nations and advocacy groups at a U.N. conference in Ethiopia are pushing for a new global body to tackle tax avoidance by companies, a move opposed by richer nations.
Responsibility for tax standards should be moved to the United Nations from the Organization for Economic Cooperation and Development, a group of 34wealthy countries, according to a position paper endorsed by civil society groups.
For the BNA DTR story, go here. (subscription required)

The Australian Taxation Office is developing a standardized approach for determining an economic group's totalworldwide profit from Australian-linked business activities and the Australian and offshore tax paid on that profit, according to the senatorwho initiated the current inquiry into corporate tax avoidance.
For the BNA DTR story, go here. (subscription required)

Jeffery M. Kadet uses hypothetical but realistic examples to show how the IRS could combat profit shifting by directly taxing the effectively connected income of controlled foreign corporations.
For the Tax Notes special report, go here. (subscription required)

The OECD and the United Nations Development Programme (UNDP) have launched a new initiative to help developing countries bolster domestic revenues by strengthening their tax audit capacities.
For the OECD release, go here.

George Osborne's surprise corporation tax cutwill push foreign investment into Britain up by 2 per cent in the long run but could risk the UK being branded a tax haven, according to some experts.

Mr Osborne used his summer Budget to promise to "go further in creating a Britain that is one of the most competitive economies in theworld" by cutting the rate to 18 per cent ÔøΩ the lowest rate in the G20 ÔøΩ by 2020.

For the Financial Times story, go here.

Theworld Bank and IMF have launched a joint initiative to help developing countries strengthen tax systems, increase tax revenue, and participate in international tax policy debates, according to a July 10 release.
For the release, go here.

A new OECD consultation paper seeking feedback onways low-income countries can effectively use tax breaks to attract investmentwill help developing nations "protect themselves from toxic tax incentives," Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, told Tax Analysts.
For thewWTD story, go here. (subscription required)

Mindy Herzfeld reviews selected presentations from two recent conferences at Oxford and discusseswhy they refute the popular notion that fairness should drive the reform of international tax policy.
For the Tax Notes International article, go here. (subscription required)

Change in leadership of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations could mean a friendlier hearing environment for businesses, as some see evidenced in an upcoming panel on the tax motivation behind foreign mergers.
For the TNT story, go here. (subscription required)

Patent box proposals are very much in play in international tax overhaul talks, according to Houseways and Means Committee Chairman Paul D. Ryan (R-Wis.).

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

Some members of Congress are pushing a tax reform deal thatwould kill two birdswith one stone: Itwould remove pressure on U.S. companies to move out of the country and unlock billions in tax revenues to replenish the empty highway trust fund. But the idea,which some analysts have described as a fad for its sudden popularity, faces some major obstacles.
For thewashington Examiner story, go here.

BEPS, the OECD's Base Erosion and Profit Shifting plan, lays out actions designed to realign current tax policywith the realities of the global economy.
For the CFO.com story, go here.

The United Nations has published itsworld Investment Report 2015 - Reforming International Investment Governance (UNCTAD/WIR/2015),which includes, in Chapter V "International Tax and Investment Policy Coherence," the comment that corporate tax anti-avoidance discussions should pay more attention to investment policy in developing countries and proposes a set of guidelines for tax and investment policy. The authors claims that the chapter helps lay the foundation for a discussion on harmful tax competition.
The chapter suggests that "The policy imperative is, and should be, to take action against tax avoidance to support domestic resource mobilization and to continue to facilitate productive investment."
For the UN report, go here.

Developing countries should implement simple, fair, and broad-based tax systems to improve tax ratios and spend extra revenue efficiently to support inclusive growth, IMF Managing Director Christine Lagarde said in July 8 remarks.
For the remarks, go here.

At the final public consultations on the G-20/OECD base erosion and profit-shifting project in Paris July 6 and 7, thoughts turned to the next phase.
For thewWTD story, go here. (subscription required)

The OECD has issued for public comment an options paper on the design and implementation of tax incentives to attract investment in low-income countries; submissions on the paper are due August 5.
For the paper, go here.

U.K. Chancellor of the Exchequer George Osborne's decision to further slash corporation tax rates in 2017 and 2020 should help to encourage multinational companies to continue to invest in the U.K., tax attorneys and analysts told Bloomberg BNA.
In his interim Summer 2015 budget speech, Osborne announced that the U.K.will slash its 20 percent corporate tax rate to 19 percent in 2017, and to 18 percent by 2020.

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

In this exclusive op-ed piece for International Tax Review, Chris Lenon, former head of tax for Rio Tinto and an expertwitness to the Independent Commission for the Reform of International Corporate Taxation (ICRICT), argues that a focus on incentives and ultra low or no tax jurisdictions should be policy makers' priority, rather than ideas included in the commission's report, such as allocation.
For the ITR op-ed, go here.

The EU and its member states should make multinationals report their financial performance, tax details, assets and employee numbers country by country, so as to help fight tax evasion and illicit money flows in developing countries, says Parliament in a non-binding resolution voted onwednesday. MEPs also call on EU financial institutions to ensure that companies receiving EU support do not "participate" in tax evasion.
For the European Parliament news story, go here.

Americans for Tax Fairness executive director Frank Clemente today released the following statement in response to the introduction of a tax reform framework to overhaul the U.S. international tax system drafted by Senators Chuck Schumer (D-NY) and Rob Portman (R-OH). "We are deeply disappointed by the Schumer-Portman tax reform framework. If a plan that followed this frameworkwere enacted itwould be a bigwin for some of theworst tax dodging corporations in America, and a huge loss forworking Americans and small businesses."
For the ATF release, go here.

Tom Zollo, Jason Hoerner, and Sue Yueqianwu argue that Treasury contradicted its own regulations and prior pronouncements by releasing AM 2015-002 and that the IRS shouldwithdraw the memorandum and considerwhether and how to revise the tax rate disparity test through the issuance of updated regulations.
For the Tax Notes viewpoint, go here. (subscription required)

Large firms and listed companies should have to disclose information, country by country, on profits made, tax paid on profits and public subsidies received, said MEPs onwednesday in amendments to draft rules intended to boost transparency and foster shareholders' long-run commitment to companies. They alsowant to empower shareholders to vote at least every three years on directors' pay policy.
For the European Parliament News story, go here.

The UK Budget, released July 8, 2015, announced a tax rate cut and focused on tackling tax avoidance and aggressive tax planning. Piecemeal changes and new initiatives intend to raise approximately £7bn in revenue, butwith no big headline grabbers.

For the PwC Insight, go here.

Two senior senatorswednesday outlined a plan for overhauling the U.S. system of taxing overseas corporate income, and potentially using the revenue as a source of funding for aging highways and infrastructure.
For thewall Street Journal story, go here.

Two senior senators -- one Republican, one Democrat -- proposed onwednesday that the government significantly reduce the tax rate on United States corporate profits overseas, butwith a mandatory transition tax on such profits to pay for an expansive highway and infrastructure program.
For the New York Times story, go here.

Proclaiming that the U.K. is "open for business," Chancellor of the Exchequer George Osborne on July 8 announced in his summer 2015 budget that the government plans to slash its 20 percent corporate tax rate, already the lowest in the G-20, to 19 percent in 2017, then to 18 percent in 2020.
For thewWTD story, go here. (subscription required)

The United States on July 7 signed an income tax treatywith Vietnam, the first ever between the two countries.
For the TNT story, go here. (subscription required)

The Senate Finance Committee's international tax reformworking group released on July 8 its much-anticipated report,which,while lacking in many finer details, describes a bipartisan framework for reform that includes a dividend exemption system, a potential patent box, and base erosion prevention measures.
For the TNT story, go here. (subscription required)

In an attempt to make the U.K.'s tax regime even more competitive, U.K. Chancellor of the Exchequer George Osborne announced plans to further lower the corporation tax rate to 19 percent in 2017, and to 18 percent by 2020.
For the BNA DTR story, go here. (subscription required)

The European Parliament voted overwhelmingly in favor of expanding the scope of the current European Union country-by-country tax reporting requirement to include all listed companies and non-listed companieswith more than 500 employees.

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