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EU, U.S. Observers Say Green Goals Require Both Carrot and Stick
European Commissioner for Competition Margrethe Vestager said that taxing bad behavior is more efficient than rewarding good behavior for achieving clean energy goals, but sometimes subsidies are necessary to support innovation.
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International Tax Stability: Accounting for Tax Incentives
Mindy Herzfeld explores how tax incentives might evolve in response to the OECD two-pillar deal.
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African Countries Talk Pillar 2 Top-Up Taxes, U.N. Tax Position
The African Union is seeking ways to protect its member countries’ tax bases, including adopting domestic minimum top-up taxes and formulating a common position to help shape the U.N. debate on international tax cooperation.
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Irish Corporate Tax Revenue Highly Concentrated Among Three MNEs
Three corporate groups accounted for about one-third of Ireland’s total corporate tax revenue, with contributions amounting to EUR 5.2 billion in 2021, according to Ireland’s fiscal watchdog.
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IASB Proposes Pillar 2 Tax Changes to SME Accounting Standard
The International Accounting Standards Board is seeking input on proposed temporary accounting relief for deferred taxes for small and medium-size enterprises in response to OECD-brokered pillar 2 global minimum tax rules.
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Japan to Take Budgetary Steps to Help Its Chip Industry
Japan plans to use tax incentives to stimulate investment in its semiconductor industry, as well as biotechnology, storage batteries, and data centers. The move is part of Prime Minister Fumio Kishida's "new capitalism" agenda.
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Netherlands Presents Pillar 2 Bill to Parliament
The Dutch government has presented to parliament a bill that would implement global minimum taxation as required under pillar 2 of the OECD’s two-pillar deal to modernize corporate tax rules.
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US-Chile Tax Treaty Passes Test at Key Senate Panel
A U.S.-Chile tax agreement was approved by the Senate Foreign Relations Committee, advancing it to a full Senate vote. The treaty with one of the world’s largest lithium producers, which was negotiated in 2010, is considered important for the U.S. manufacture of semiconductor chips.
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NYSBA Tax Section Comments on Pillar 2 FTC Considerations
The New York State Bar Association Tax Section has submitted a report to the U.S. Treasury Department and the IRS regarding foreign tax credit considerations related to the OECD’s pillar 2 model rules, discussing considerations raised by pillar 2 taxes under the current IRS section 901, section 904, and section 960 rules; raising policy considerations for granting a credit for those taxes; and recommending related guidance.
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Angel Assures That EU's SAFE Proposal Is Still in the Works
Benjamin Angel, director of direct taxation at the European Commission’s Directorate-General for Taxation and Customs Union, said that the removal of a proposal to address tax avoidance enablers from the European Commission’s agenda should not be overinterpreted.
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Stellantis Plant Likely to Top $10 Billion in Canada Subsidies
Stellantis could receive C$19 billion in subsidies from the Canadian government for a new electric vehicle battery plant. Canada is competing with the US to attract production of battery cells after President Biden signed the IRA.
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International Tax Stability? Latin America Dents OECD Armor
Mindy Herzfeld examines how actions taken by countries in South America and the Caribbean, and the treaties that bind them, could undermine the OECD two-pillar deal’s promise of international tax stability.
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European Parliament Lawmaker Laments Stuck EU Shell Companies Rule
A law aimed at shell companies is stalled due to disagreements between EU member states. Some want it to require sanctions against tax-avoiding shell structures while others want it to be downgraded to an "exchange of information" system.
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Vietnam Weighs Tax Handouts Amid Pressure From Samsung
Vietnam is considering compensating foreign investors for higher levies set to take effect next year under the global tax deal.
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EU Push Crucial to International Tax Deal Finalization, Official Says
The EU is planning a directive for Pillar One similar to what was adopted for Pillar Two, and the framework is expected to be in place by July. An EU official said the move will catalyze a “political mass” for adoption of Pillar One at the international level.
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Zimbabwe Will Introduce 1% Tax on Foreign Payments From June 1
Zimbabwe is introducing a 1% tax on all foreign payments made in the country to help the government stabilize the economy and raise revenue to pay for foreign-currency denominated debt.
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Switzerland to Set Up One-Stop Shop in Pillar 2 Adoption Plan
Switzerland is seeking input on a proposal to minimize the administrative burden for multinational enterprises with business units across multiple Swiss cantons under a new supplementary tax regime aligned with OECD global minimum tax rules.
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Commission Calls Out Luxembourg, Malta Over Tax Planning
The European Commission said in its country-by-country economic recommendations that aggressive tax planning in Luxembourg and Malta is still of concern, particularly regarding withholding taxes on outbound dividend, interest, and royalty payments.
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IASB Publishes Revised Tax Accounting Rules for Pillar 2
The IASB has published final amendments to a key standard providing temporary relief from deferred tax accounting in response to worldwide adoption of OECD-brokered global minimum tax rules.
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G-7 Leaders Vow to Finish Pillar 1 Tax Convention Talks
The leaders of the G-7 countries are still aiming to quickly conclude talks on a multilateral convention that would implement pillar 1 of a two-pillar global corporate tax reform plan, according to their latest communique.
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Australia Issues Draft Guidance on Intangible Arrangement
The Australian Taxation Office is soliciting comments on draft guidelines for its compliance and risk assessment framework on intangible arrangements between international related parties, revising a version from 2021.
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GOP Takes Aim at OECD's Minimum Tax Ahead of Paris Trip
Republicans lawmakers in the U.S. are criticizing the OECD's global minimum tax proposal and may try to impose a reciprocal tax on countries implementing an undertaxed profits rule or similar taxes.
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Crown Dependencies to Adopt OECD Pillar 2 Tax Rules for 2025
Guernsey, the Isle of Man, and Jersey have confirmed that they will implement OECD-backed income inclusion rules and domestic minimum taxes, beginning in 2025, to ensure that large multinationals pay a 15 percent effective tax rate.
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Bahamas Sets Out Potential Corporate Tax Responses to Pillar 2
The Bahamas is seeking stakeholder input on possible options for a new corporate income tax regime to support its implementation of global minimum tax rules under the OECD’s two-pillar international tax reform plan.
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International Tax Stability? The China Factor
Mindy Herzfeld examines whether a multilateral economic arrangement that fails to fully consider how and whether the world's second largest economy will participate can truly bring stability to the international tax architecture, and how China's role in the deal might affect other countries' tax revenue and their economic competitiveness.
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African Nations Warned Tax Incentives at Risk in Global Deal
An official from the African Tax Administration Forum said African countries must adopt minimum tax legislation to avoid losing corporate revenues under the global tax deal. They can use a domestic minimum top-up tax to get first rights to tax companies in their jurisdictions at the 15% minimum rate.
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New Zealand Proposes Global Minimum Tax Rules to Start in 2024
The Kiwi government has presented draft legislation to implement global anti-base-erosion (GLOBE) rules under pillar 2 of the OECD’s two-pillar tax reform plan beginning next year, but the new rules will not raise much revenue.
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US-Chile Tax Treaty Inches Toward Senate Vote
A U.S.-Chile tax treaty is moving closer to a Senate vote after lawmakers worked out concerns over language on foreign tax credits. The pact was signed in 2010 but has not yet been approved by the Senate.
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Complex Cases Will Still be Accepted for APAs, IRS Official Says
The IRS has confirmed its willingness to work on intricate transfer pricing disputes between multinational corporations and tax authorities, despite speculation that it would not.
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France Proposes Tax Breaks to Ease Transition to Greener Economy
France’s government has proposed tax credits and other initiatives to take advantage of relaxed EU state aid rules intended to allow the bloc to compete with the United States and transition to a greener economy.
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U.S. Must Act on Pillar 2 Adoption in 2025, Grinberg Warns
Itai Grinberg, a former Treasury deputy assistant secretary for multilateral tax, warned that the United States will be under pressure to conform with OECD global minimum tax rules in 2025, but domestic political headwinds against those rules will make that task a challenge.
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Jeremy Hunt Says He Can't Promise Tax Cuts Before Next UK Election
The UK’s Chancellor of the Exchequer says tax cuts are not a priority at the moment, as the government's focus is on reducing inflation and maintaining the UK’s credibility with financial markets.
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Swedish Group Criticizes EU Pillar 2 Shipping Income Carveout
Swedish shipowners have warned the Swedish government that the EU global minimum tax directive’s international shipping income exemption is inconsistent with EU tonnage tax regimes, echoing concerns underpinning a recent legal challenge against the directive.
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G-7 Finance Ministers Call for More Pillar 2 Tax Guidance
Countries are making good progress in adopting OECD-brokered global minimum tax rules but need more advice from the OECD to ensure conformity in their efforts, according to G-7 finance ministers and central bank governors.
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Crypto Tax Reporting Crackdown Gets EU Minister Approval
EU finance ministers have provisionally agreed on a rule that would require crypto-asset service providers to report transactions of their EU clients to tax authorities starting in 2026. The rule is part of the EU's efforts to track crypto transactions and ensure related taxes are paid.
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Amount A Tax Convention on Track for July, OECD Tax Chief Says
According to the OECD’s new tax head Manal Corwin, the text of a multilateral convention that would implement pillar 1 of a two-pillar global corporate tax reform plan will be ready by the summer as planned.
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Some U.S. Solar Makers Criticize Biden's Tax Credits as Too Lax on China
On May 12, the Biden administration released rules that will determine which companies and manufacturers can benefit from new solar industry tax credits. These rules are being criticized by U.S.-based makers of solar products, who say the guidelines do not go far enough to try to lure manufacturing back from China.
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OECD to Finalize Mechanism for Secure Tax Communications in 2024
The OECD is developing an approach to allow confidential discussions between tax administrations and taxpayers in support of a two-pillar global tax reform plan and expects it to be operational next year.
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Republicans Disrupt Hearing on Pharma Tax Rates With OECD Gripes
Republican senators derailed a May 11 hearing meant to address American pharmaceutical companies’ low effective tax rates with complaints about U.S. participation in OECD pillar 2 international tax talks.
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Brazilian Senate Passes OECD-Aligned Transfer Pricing Standards
The Brazilian Senate has approved a proposed overhaul of the country’s transfer pricing system to coordinate its tax regime with international principles, and the law is expected to be enacted in the next few weeks.
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Ireland Eyes Options for Moving Windfall Receipts to Wealth Fund
Irish Finance Minister Michael McGrath has floated depositing up to €90 billion in excess corporate tax receipts into a new sovereign wealth fund over the next seven to 12 years. According to a May 10 scoping paper, Ireland is considering three scenarios in which it deposits anywhere between €34 billion and €90 billion in windfall corporate tax receipts into a new sovereign wealth fund established to enable it to deal with the economic risks of its aging population.
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Australia Plans to Adopt Pillar 2 Minimum Tax Rules for 2024
Australia has confirmed its intention to implement domestic minimum tax and global anti-base-erosion (GLOBE) rules that will start taking effect in 2024, in line with pillar 2 of the OECD’s two-pillar international tax reform plan.
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EU Pillar 2 Carveout for Shipping Income Challenged
A company has filed an application with the General Court of the European Union contesting the validity of the EU global minimum tax directive’s international shipping income exemption. A summary of the application that was published on May 8 argued that the court should annul the exclusion under Council Directive (EU) 2022/2523 and order the Council of the European Union to cover the costs of the procedure.
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Companies Flock to Biden's Climate Tax Breaks, Driving Up Cost
President Biden’s climate law appears to be encouraging more investment in American manufacturing than initially expected. This boom in new economic activity is driving up costs for taxpayers, who are subsidizing the investments.
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OECD Mulling Clarifying Global Minimum Tax Rule on Intracompany Loans
The OECD is considering clarifying a rule intended to prevent multinational groups from trying to use intracompany loans to game the new global minimum tax, an IRS official said on May 5.
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IRS Issues Rules on Intellectual Property Repatriations
The IRS released rules affecting intangible property repatriations or transactions in which companies bring intellectual property like patents and trademarks back to the United States. The proposed rules would turn off the application of 367(d) in certain instances to help avoid “excessive” U.S. taxation on income related to the repatriated intangible property.
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Kenya Proposes Taxes on Digital Assets and Content Creation
The Kenyan government has presented draft legislation to Parliament calling for a three percent tax on digital asset transfers and a fifteen percent withholding tax on digital content creation to help finance its 2023-2024 budget.
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'Double Tax' Hinders Taiwan's Investment in American Factories
A “double tax” conundrum involving Taiwanese businesses operating on American soil is straining business ties between the U.S. and Taiwan, a technology manufacturing powerhouse and a central player in Washington’s plan to counter the rise of China and strengthen U.S. supply chains.
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Global Tax Deal Negotiations See Progress, US Official Says
Negotiators have been “seeing progress” over the last few months on Pillar One of the OECD-led global tax deal, a Treasury official said on April 28.
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US Tax Credit Issues Loom for Companies Under Global Minimum Tax
Companies are looking to the IRS to clarify how and to what extent the global minimum tax they pay in other countries will be eligible for a foreign tax credit back home.