Int'l Tax News

Claimingwithholding tax relief under treaties and domestic law is often cumbersome, time and resource intensive for the bulk of foreign portfolio investors and thus often does not happen.

After several years ofworkwith governments and businesses around theworld and in close co-operationwith the EU, the OECD has developed and approved a standardised system of effective treaty and domestic relief including a complete implementation package for countries to move forward (“TRACE). This is a major step in streamlining processes, reducing costs, and giving investors their rightswhile improving tax compliance.

Drug makers are taking new steps to lower their taxes significantly, in a boon to their bottom lines.

A consumer advocacy group is urging states to get ahead of Congress in cracking down on offshore tax avoidance that costs states an estimated $40 billion in annual revenue.

State governments can take several steps to collect revenue fromwealthy individuals and corporations, even if those actions are not matched on the federal level, the United States Public Interest Research Group says in a report released Tuesday.

Trade bodies representing MMFs have been left dismayed at the emergence of revised and strengthened plans from Brussels for a so-called "Tobin tax on equity, bond and derivative transactions, reported by the Financial Times lastweek.

Wolfgang SchÔøΩuble and George Osborne, finance ministers of Germany and the UK, call for "concerted international co-operation" to make corporate taxation more effective. The sentiment cannot be faulted. But they need to prove this is not all talk and no action.

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Westminster is rarely a palace of pleasure, but Thursday brought the magnificent spectacle of Margaret Hodgewalloping the big four accountancy firms for their role in helping companies deprive the Treasury of taxes everyone else has to pay. Four heads of tax at PWC, Ernst & Young, Deloitte and KPMGwriggled and obfuscated, hiding behind the polite euphemisms of their trade. Never say avoidance or, God forbid, evasion but call it "tax planning" and "tax efficiency".

The initiativewas announced in a report titled "Tackling Offshore Tax Evasion" thatwas issued by OECD Secretary-General Angel Gurría and submitted on June 19 to G-20 leaders meeting in Los Cabos, Mexico.

Catherine the Great is supposed to have said,A greatwind is blowing, and that gives you either imagination or a headache. In Washington,winds are stirring for corporate tax reform. Butwhile there is broad bipartisan agreement that tax rates should be reduced, there is less consensus regardingwhat the tax rate should be, how to pay for a tax cut, or generally how to treat international business income. These considerations are inextricably intertwined because the U.S. assesses its corporations onworldwide income.

A Conservative MP haswritten to the chief executives of all FTSE 100 companies seeking their support for corporate tax transparency and a new international accounting standard requiring country-by-country reporting of profits and taxes paid.

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This article is about allocatingworldwide interest using gross profits as the allocation factor. The term "gross profits" means profits before interest or taxes. In addition to the salutary effects on artificial profit shifting that it shareswith other interest allocation methods -- in particular, allocation of interest by assets -- interest allocation using gross profitswould reduce the incentive to shift profits by adjusting transfer prices. It does this by narrowing the difference between domestic and foreign effective tax rates.

Oh, but India signed a bunch of OECD model treaties that restrain source country taxation! That doesn't always stop a determined interpretation of fuzzy treaty terms. There is no requirement that the document be interpreted in favor of the foreign business.

Corporate CEOs have released theirwish list forwhat Washington should do to energize an economy they expectwill grow just 2% this year. High on the list: reforming the corporate tax code.

John Engler, president of the Business Roundtable,which represents the CEOs of more than 200 U.S. companies, tells The Daily Ticker that the 35% top marginal corporate tax rate in the U.S.—the highest in the developedworld—is too high and creates difficulties for U.S. corporations competing in the global market.

“This is just a numbers game, andwere losing at it," says Engler. “Even Canada has a 15% corporate tax rate. Engler says the relatively high U.S. corporate tax rate affects corporate decisions on location, investment and jobs.

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