Int'l Tax News

Participants in an April 17world Bank presentation on tax evasion and avoidance stressed the need for developed countries to assist developing countries in improving information exchange and improving the capacity of tax authorities.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on the April 17 remarks of Robert Stack, Treasury deputy assistant secretary (international tax affairs), about the transfer pricing, permanent establishment, and multilateral agreement actions of the OECD base erosion and profit-shifting project.
For the Tax Notes story, go here. (subscription required)

Business is braced for a slew of new anti-avoidance measures after the UK general election next month as politicians compete on promises to raise billions of pounds from closing tax loopholes.

Chuka Umunna, the shadow business secretary told a conference that constituentswere "very, very angry indeed" about avoidance by large companies. Nick Boles, Conservative business minister, said therewas "further to go" on tackling avoidance by big global corporations.

For the Financial Times story, go here.

Keeping track of tax law changes around theworld has increasingly become a challenge for businesses. Companies are rapidly expanding their geographic footprint at a timewhen the evolution and developments in jurisdictional tax laws are undergoing nearly constant change. Naturally, changes in tax law have an impact on tax planning, tax return preparation and, ultimately, tax cash flows. Those consequences, however, are often preceded by the impact of such changes on company financial reporting.
This is the third edition of our global publication on tax law enactment and substantive enactment dates. This edition has been updated to include information on 17 additional jurisdictions. It also reflects any changes in our understanding of the lawmaking processes of jurisdictions presented in the previous edition.

For the PwC Tax Accounting Services publication, go here.

Therewas a moment on Tuesday evening – hours before the first public hearing of the Senate inquiry into corporate tax evasion –when Treasurer Joe Hockey and his advisers should have sensed a firestorm approaching.

Sandwiched between a story on a Gold Coast diet blogger accused of pinching other people's recipes and and the tale of a solicitorwho fleeced a dementia patient, Channel Nine's A Current Affair entered the debate on Australia's company tax system. Itwas unusual terrain for the tabloid TV show to cover.

More than a million peoplewatched the segment titled "Tax dodgers named and shamed". Itwas the moment the festering issue of corporate tax dodging jumped from the pages of the financial and broadsheet press and firmly into the mainstream.

For the Sydney Morning Herald story, go here.

by Zachary Mider (Bloomberg)

When it comes to taxes, corporate America is getting a bit less corporate. And a bit less American.

Fueled by awave of inversions, a record 54 companies in the Standard & Poor's 500 Index of leading U.S. firms are now at least partially exempt from the corporate income tax. That's more than twice the number four years ago.

For the Bloomberg story, go here.

by Steven Johnson and Madison Marriage (Financial Times)

Listed companies in developed markets are avoiding at least $82bn of tax a year by using tax havens and other minimisation strategies, according to detailed analysis of more than 1,000 businesses.

The revelation comes as campaigners and investors have increased their focus on the impact of corporate tax avoidance on public finances at a time ofwidespread austerity.

For the Financial Times story, go here.

The European Commissionwill review its 2015 changes to VAT paid on business-to-consumer (B2C) supplies of digital services,whichwere implemented on January 1 2015. MOSS critics say that if the review takes too long, it could leave the digital single market "dead in thewater".
For the International Tax Review story, go here.

Dermot Donegan, head of VAT policy at the Irish tax authority (Revenue), speaks exclusively to ITR about the EU's place of supply ruleswere finalised during the Irish presidency of the EU Council, his thoughts around their implementation and the possibility of expanding the mini one-stop shop (MOSS) to cover goods and other services.
For the International Tax Review story, go here.

The international project to fight base erosion and profit shifting made a "political mistake" by focusing too much on U.S. multinationals, undermining American support for BEPS plan outcomes, a Treasury Department official said.
For the BNA story, go here. (subscription required)

At the American Bar Association Section of Taxation/International Bar Association conference in Munich on April 16, the questionwas raisedwhether base erosion and profit-shifting solutions being proposed through the OECDwould not overwhelm tax administrators.
For the TNT story, go here. (subscription required)

The Treasury Department is putting a significant amount of effort into international tax overhaul and believes there is still a possibility for movement, Treasury International Tax Counsel Danielle Rolfes said.
For the BNA story, go here. (subscription required)

Contrasting it at timeswith former Houseways and Means Committee Chair Dave Camp's tax reform plan, a Treasury official April 16 extolled the neutral treatment of foreign-owned versus U.S.-owned multinationals in the Obama administration's fiscal 2016 budget international proposals.
For the TNT story, go here. (subscription required)

The Senate Finance Committee's internationalworking group is considering awide range of ideas, from former Houseways and Means Committee Chair Dave Camp's tax reform plan to thewhite House's fiscal 2016 budget, as it grappleswith how to address base erosion concerns, a Senate aide and tax observers recently told Tax Analysts.

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The Danish government has introduced a Bill (L167) to implement a general anti-avoidance rule (GAAR) in the country for the first time,whichwould enable authorities to deny treaty benefits if obtaining those benefitswas the sole or main purpose of an arrangement.

For the International Tax Review story, go here.

If youwere a multinational firm,wherewould you locate your activities and investments? A handful of economic factors play a role in this decision, but for tax-related aspects, youwould think in terms of an average effective tax rate. It's not that complicated; let me explain.
For the Forbes article, go here.

Jasper L. "Jack" Cummings, Jr. reviewsways to avoid the negative consequences of earnings and profits in foreign corporations andways to increase the E&P accountwhen advantageous.
For the Tax Notes article, go here. (subscription required)

The Organization for Economic Cooperation and Development's base erosion and profit shifting project is becoming increasingly important to discussions about taxes in Congress, a Senate staffer said.
"This is something that is getting more and more attention on Capitol Hill," said Zach Rudisill, tax counsel for Sen. Rob Portman (R-Ohio).
For the BNA story, go here. (subscription required)

Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) are planning to introduce a bill soonthatwould establish a voluntary 6.5 percent tax rate on offshore earnings,which Boxer said could be a funding mechanism to help pay for a long-term surface transportation reauthorization.

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

Two proposals to address multinational corporations' large stockpile of offshore profits ÔøΩ a transition tax on those profits and a repatriation tax holiday ÔøΩ may appear similar at first blush but are opposites in manyways. A transition tax is a sound policy thatwould raise revenues for infrastructure investments or other uses; a repatriation holiday is a tax cut that loses revenue and consequently could not pay for anything.
For the CBPP report, go here.

French Finance Minister Michel Sapin and Minister of State for the Budget Christian Eckert have announced four new measures to boost tax transparency and improve relations between tax officials and businesses.
Stability, security and visibility are the three pillars of taxation that enable businesses to invest and operate transparently, the statement said.
For the BNA story, go here. (subscription required)

Counting all federal, state, and local taxes, the U.S.was the fourth-least taxed country among the 34 OECD countries in 2013, at 25.1 percent, above only Korea, Chile, and Mexico, Citizens for Tax Justice said in an April 9 release.
For the CTJ report, go here.

Government representatives from Japan and nine other Asian jurisdictionswho met in Tokyo discussed challenges including tax avoidance through base erosion and profit shifting (BEPS) on the last day of a three-dayworkshop on international taxation presented by the International Monetary Fund and Japan's Ministry of Finance.
For the BNA story, go here. (subscription required)

Major accounting firms say they are not doing anything illegal in helping corporations to minimise tax liabilities.
For the ABC (Australia) story, go here.

Australian Treasurer Joe Hockey isworking on new laws to counter tax avoidance by global companies, but the OECD is urging countries not to go it alone. The Paris-based institution has beenworking on a so-called base erosion and profit-shifting action plan through the G20 since 2013 and is aiming to complete itswork by October.
For the news.com.au story, go here.

Designed to help multinationals stay aware of tax accounting and regulatory developments under US GAAP and IFRS,whilst providing technical guidance on challenging tax accounting areas. Among the topics featured in this edition are:
FASB's exposure draft on intra-entity asset transfers and balance sheet classification of deferred assets and a proposed exposure draft on tax accounting for stock compensation
The IFRS Interpretation Committee's exposure draft on the measurement of uncertain tax positions
SEC staff's tax accounting areas of focus
OECD's country-by-country reporting (CBCR) implementation package recommending that multinationalswith revenues above Euro 750 million file CBCR startingwith fiscal years beginning on or after 1 January 2016
Enactment of the UK Diverted Profits Tax
The European Commission's package of tax transparency measures
Technical guidance onwhich standards apply to various types of taxes or tax systems that could be helpful in accounting considerations associatedwith new or unusual taxes

For the PwC newsletter, go here.

Ahead of thisweek's income tax filing deadline, the National Association of Manufacturers and the Manufacturers Alliance for Productivity and Innovation Foundation said the U.S. should exempt its companies' foreign earnings from corporate taxes.
For the manufacturing.net story, go here.

Public Comments are invited on adiscussion draftwhich dealswith Action 11 (Improving the analysis of BEPS) of the BEPS Action Plan.
Action 11 of the BEPS Action Plan focuses on improving the availability and analysis of data on BEPS, including to monitor the implementation of the Action Plan and to evaluate the effectiveness and economic impact of actions to address BEPS on an ongoing basis.
For the OECD release and discussion draft, go here.

Tax planning figures prominently in decision-making for large public companies looking to grow,with only 10 percent of tax directors saying their primary concern is that business decisions are being madewithout it.
"When seeking expansion opportunities, integrating tax planning into the early stages of that process can have a positive impact on both the organization and the jurisdiction inwhich itwill operate," said Matthew Becker, partner in the tax practice at BDO USA LLP.
For the BNA story, go here. (subscription required)

Two Treasury Department officials say the forthcoming rewrite of Chapter 5 of the OECD's transfer pricing guidelines on documentationwill provide multinational enterpriseswith the necessary flexibility as they complete the new country-by-country reporting template.

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

by Kevin A. Bell (Bureau of National Affairs)

A Microsoft tax official said that an example involving product recall risk in the Organization for Economic Cooperation and Development's discussion draft on risk, recharacterization and special measures should adopt a pricing analysis.

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

The Seychelles Revenue Commission has issued a draft public ruling on applying the transfer pricing arm's-length principle to business transactions under the 2009 Business Tax Act.

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

International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are:

For the current edition of PwC's International Tax News, go here.

Reversing a 2013 US Tax Court decision, the Fifth Circuit in BMC Software, Inc. v. Commissioner, No. 13-60684 (March 13, 2015), held that an actual debt obligation implicating Section 965 limitations did not spring into existence retroactivelywhen the taxpayer established accounts receivable to facilitate repatriation of Section 482 adjustments. The Fifth Circuit ruled that that the deemed backdating of the accounts established under Rev. Proc. 99-32 did not change the reality that no actual indebtedness existed as of the close of the relevant Section 965 testing period.

For the PwC Insight, go here.

Multinational enterprises (MNEs)will be concerned about the Base Erosion and Profit Shifting (BEPS) discussion draft on controlled foreign company (CFC) rules published over the Easterweekend. This discussion draft relates to Action 3 of the BEPS Action Plan as agreed by the Organisation for Economic Cooperation and Development (OECD)with the G20 countries. The proposals are complex and, in practice, the difficulties are likely to beworsened by the degree of latitude accorded to states in applying or varying the proposed approach.
For the PwC Tax Policy Bulletin, go here.

It's beenwell documented that major U.S. multinational corporations are stockpiling profits offshore to avoid U.S. taxes. Congressional hearings over the past few years have raised awareness of tax avoidance strategies of major technology corporations such as Apple and Microsoft, but, as this report shows, a diverse array of companies are using offshore tax havens.
For the CTJ report, go here.

With the Indian tax authority's limited resources for reviewing advance pricing agreement applications and its large backlog of cases, the United States and India may need to find a "creative approach" to streamline the bilateral APA process, Michael Danilack of PricewaterhouseCoopers LLP said.

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

Draft plans to remove tax benefits for cross-border funds to eradicate Base Erosion and Profit Shifting could significantly impact investment into UCITS (Undertakings for Collective Investment in Transferable Securities) funds, the Association of the Luxembourg Fund Industry (Alfi) conferencewas told.

For the AsianInvestor story, go here.

The Malaysian Ministry of International Trade and Industry on April 6 issued guidelines on incentives for multinational corporations (MNCs) seeking to establish or expand their presence in ASEAN or the Asia Pacific region through a Malaysian Principal Hub. The incentives are structured in 3 tiers based on various criteria including minimum annual sales, employment, annual business spending and other qualifying activities.

For the PwC Insight, go here.

Read April's International Tax Review cover story on how authorities around theworld are turning to tax in reaction to the oil price drop.

For the story, go here.

The Israel Tax Authority's decision to impose value-added tax and income tax on multinational Internet companies could cost them up to 1.3 billion shekels ($332 million) annually, according to the lawyerwho has long been pressing Israel's government to tax the local business activity of such companies.
For the BNA story, go here. (subscription required)

One of the pending impacts of the international project to combat base erosion and profit shifting (BEPS)will be to require practitioners to better explain how transactions treat risks and functions, an officialwith the Organization for Economic Cooperation and Development said.

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

The European Commission's three-week-old initiative to ensure the automatic exchange of advance pricing agreement and tax ruling data between its member states is the latestÔøΩand perhaps strongestÔøΩmove toward ensuring uniform tax transparency in the international corporate tax system.
But according to one practitioner, taxpayers should greet the European initiativewith open arms, not fear.
For the BNA story, go here. (subscription required)

The Organization for Economic Cooperation and Development recommended a broad definition of a controlled foreign corporation in the latest discussion draft under its base erosion and profit shifting project, butwasn't able to settle on a CFC income definition.

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

National tax laws are struggling to keep pacewith the rise of the digital economy and the progress of multinational companies. These factors leave gaps that are susceptible to misuse and lead to cases of double non-taxation,which undermine the integrity and fairness of tax systems around theworld. The Base Erosion and Profit Shifting ("BEPS") Project seeks to address this problem through measures that focus on three core principles -- coherence, substance and transparency -- andwill result in fundamental changes in international tax standards.
For the BusinessWorld article, go here.

The authorswarn that the approach in the Organization for Economic Cooperation and Development's December 2014 discussion draft on recharacterizationwill empower tax authorities to disregard taxpayers' transactions as structured, leading to an increase in double tax cases forwhich governments are unprepared. In addition to urging a change in direction, the authors recommend implementing mandatory, binding arbitration to copewith the anticipated increase in disputes.
For the BNA Insight, go here. (subscription required)

byBagadiya, Tirthesh (International Tax Review)

Read about the lingering concerns held by businesses after place of effective management (POEM) changeswere announced in the Indian Budget at the end of February.

For the story, go here.

Multinational enterprises (MNEs) should consider the details of the discussion draft published on 31 March on disclosure of tax planning arrangements to tax authorities and, in particular, the potential extension of existing regimes to incorporate 'international tax arrangements'. The discussion draft relates to Action 12 of the Base Erosion and Profit Shifting (BEPS) Action Plan agreed by the Organisation for Economic Cooperation and Development (OECD)with the G20 countries. Changes in international tax standards and other promised increases in cooperation between jurisdictions and alternative methods for addressing avoidance activity suggest a serious review of the costs and potential benefits is needed before the recommendation of any new disclosure regime for international tax arrangements.

For the PwC Insight, go here.

Tackling tax evasion should be a top EU priority. EU countries and the European Commission should play a leading role in discussing how to fight tax fraud and aggressive tax planning in the OECD and other relevant fora, says Parliament in its resolution on tax, voted onwednesday.

For the story, go here.

The OECD's discussion draft on strengthening controlled foreign corporation rules, released April 3 under action item 3 of the base erosion and profit-shifting project, is expressly not a consensus document.
For the Tax Notes story, go here. (subscription required)