The United Nations on October 2 released an updated version of its Practical Manual on Transfer Pricing for Developing Countries. On October 15, the UN Committee of Experts on International Cooperation in Tax Matters (the Subcommittee) approved the current unedited version of the UN Transfer Pricing Manual and approved a one-month period for receiving nonsubstantive comments.
For discussion, go here.Int'l Tax News
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Corporate tax posturing should stop
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The fiscal and economic risks of territorial taxation
Many policymakers say theywant to reform the U.S. system of taxing
multinational corporations so that it better promotes growth and helps
reduce budget deficits. Unfortunately, according to a new report from
the Center on Budget and Policy Priorities (CBPP), one proposal that
has received
significant attentionwould take the tax code in an ill-advised
direction, creating serious economic and fiscal risks.
For the CBPP report, go here.
For the CBPP report, go here.
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Next US model treaty may include revised discretionary competent authority provision
The revised discretionary competent authority relief provision in the
new protocol to the Spain-U.S. tax treaty may appear in the next U.S.
model treaty, Henry Louie, deputy to the Treasury international tax
counsel for tax treaty affairs, said January 15.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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Globalization poses new challenges for tax reform
The effects of globalization
and international competition on the U.S. economy and the government's
fiscal conditionwill require any tax reform effort made in the coming
months to be much different from past efforts, panelists said January 18
during a conference cosponsored by Pepperdine University and Tax
Analysts.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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Financial transactions levy tops EU tax agenda for 2013
Adopting a financial transactions tax in at least 12
European Union member states in 2013will top the EU tax agenda in 2013,
while at the same timework in the EU Council of Ministerswill
continue to help finalize pending legislation to amend EU energy and
savings tax laws, key EU tax officials said in interviewswith BNA.
For the article, go here. (Subscription required.)
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Recent Budget laws pile' tax increases on large firms in France, practitioners say
Large companies in France need to adoptnew reflexes to
contendwith apiling on
of recent tax measures that have significantly complicated their tax
arrangements, according to a Jan. 24 session by the country's largest
law firm, Fidal Direction Internationale.
The two-hour conference,which featured four attorneys from Fidal's international tax department, assessed the impact of several major tax increases that have hit businesses in France since 2011 as a succession of governments have attempted to dealwith the country's ballooning budget deficit.
For the article, go here. (Subscription required.)
The two-hour conference,which featured four attorneys from Fidal's international tax department, assessed the impact of several major tax increases that have hit businesses in France since 2011 as a succession of governments have attempted to dealwith the country's ballooning budget deficit.
For the article, go here. (Subscription required.)
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France urges OECD, G-20 action to boost taxation of global internet giants
France is urging a tightening of international tax rules
to reduce the scope of global internet companies such as Amazon, Apple,
Facebook, eBay, and Google to optimize their taxation, as key tax
discussions get underway at the Organization for Economic Cooperation
and Development in preparation for the Group of 20 nations' February
finance summit.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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French Tax Administration increasingly raiding foreign multinationals, report says
The French tax administration is increasinglywilling to
conduct tax raids to seize proof that multinational companies have
permanent establishments in France and are avoiding or evading taxes in
the country, according to a report released Jan. 24 by France's biggest
law firm.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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OECD's revised discussion draft on beneficial ownership
On 19 October the OECD released its revised proposals on the topic of
beneficial ownership. This contains some modifications from its earlier
Discussion Draft (released in April 2011)which proposed various changes
to the Commentary to the OECD Model Tax Treaty in order to clarify the
beneficial owner test.
For discussion, go here.
For discussion, go here.
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UN releases new and updated chapters of its practical manual on transfer pricing for developing countries
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Reflections on the public consultation on the OECD discussion draft on transfer pricing and intangibles
More than 120 business commentators convened in Paris for the
long-awaited 2.5 day Public Consultationwithworking Party 6 (WP6)
delegates and the OECD secretariat. These represented at least 70 firms
(including corporations, consulting firms, law firms and industry
organisations) The Discussion Draft topics discussed are (i) the Intangibles Draft; (ii) Safe Harbours; and (iii) Timing Issues.
This is the OECD's 4th Public Consultation on the Intangibles Draft since the project kicked-off in 2010.
For discussion, go here.
This is the OECD's 4th Public Consultation on the Intangibles Draft since the project kicked-off in 2010.
For discussion, go here.
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Joint Committee explanation of Obama's FY 2013 budget covers four new international tax provisions
On June 18, 2012, the JCT staff released a pamphlet that analyzes the
revenue provisions proposed in President Obama's FY 2013 federal budget.
when compared to the FY 2012 pamphlet, the new version provides similar
analysis of the international tax provisions. In addition, the pamphlet
analyzes the Administration's four budget provisions added for FY 2013.
This newsalert summarizes the JCT staff's explanation of both the
carryover and the new tax provisions.
For discussion of the JCT explanation, go here.
For discussion of the JCT explanation, go here.
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General anti-avoidance rules: what are the key elements to a balanced approach?
More and more countries, such as the UK and India, are considering the
enactment of a General Anti-Avoidance Rule (GAAR). A GAAR is typically a
statutory rule that empowers a revenue authority to deny taxpayers the
benefit of an arrangement that they have entered into for an
impermissible tax-related purpose. This broad definition only scratches
the surface -- there can be many permutationswith respect to a GAAR's
operating provisions.
For the article, go here.
For the article, go here.
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UK to introduce above-the-line R&D tax credit
A new R&D regime, effective April 1, 2013, should reduce the cost of
R&D in the United Kingdom. The credit is above-the-line, so
corporate officials should have greater visibility into how investment
decisions can benefit from the credit. In addition, some loss-making
companies could see an immediate cash benefit.
For the article, go here.
For the article, go here.
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PSI releases exhibits for hearing on offshore profit shifting and the US tax code
The Senate Permanent Subcommittee on Investigations (PSI) has released a
package of exhibits for its September 20 hearing on offshore profit
shifting and the tax code.
For the exhibits, go here.
For the exhibits, go here.
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Beware territorial tax proposals
In his Foreign Policy blog, Clyde Prestowitzwrites, "The president and Congress need to remember that those making these
proposals are not making them in their role as American citizens, but in their
role as CEOs of profit maximizing global corporations. They should recall the New York Times quote of a high ranking Apple executive to the effect that the company doesn't 'have an obligation to solve America's problems.'"
For the article, go here.
For the article, go here.
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President's Council of Advisors on Science and Technology issues report on the domestic advantage in advanced manufacturing
In a July report, the President's Council of Advisors on Science and
Technology (PCAST) discusses capturing the domestic advantage in
advanced manufacturing.
For the report, go here.
For the report, go here.
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Capping the deductibility of corporate interest expense
In a Tax Notes special report, Robert C. Pozen and Lucasw. Goodman
propose reform that lowers the corporate tax rate from 35 to 25 percent
and allows nonfinancial C corporations to deduct only 65 percent of
their interest expense,with special treatment for the financial sector
and for companies thatwould have otherwise realized taxable losses.
For the report, go here. (Subscription required.)
For the report, go here. (Subscription required.)
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President Obama statement on fiscal cliff tax legislation
In his January 1 statement on the agreement resolving the fiscal cliff
crisis, President Obama said, "And today's agreement enshrines, I think,
a principle into law thatwill
remain in place as long as I am President:The deficit needs to be
reduced in away that's balanced.Everyone pays their fair share.
Everyone does their part.That's how our economyworks best.That's how
we grow."
For the statement, go here.
For the statement, go here.
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The folly of attacking outsourcing
What's most revealing about the political assault on outsourcing is that while the critique of foreign commerce has moved decisively from the fringes into the political mainstream, our political leaders have yet to turn their rhetorical skepticism into policy.
For the article, go here.Posted on
Multinationals and the high cash holdings puzzle
Lee Pinkowitz of Georgetown, Rene M. Stultz of Ohio State, and Rohan
Williamson of Georgetown, defining as normal cash holdings the holdings a
firmwith the same
characteristicswould have had in the late 1990s, find that the
abnormal cash holdings of U.S. firms after the financial crisis
represent on
average 1.86% of assets.
For the paper, go here.
For the paper, go here.
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Italy scours deals abroad for elusive tax revenue
Italy,which has one of the biggest tax-cheating problems in the
developedworld, is cracking down on suspect offshore investments as
part of an unprecedented drive to find new sources of tax revenue and
ease concerns about its $2 trillion ($2.69 trillion) in debt.
One of the brightest spotlights is on companies suspected of earning money or shifting it abroad to avoid paying Italian taxes.
For the article, go here.
One of the brightest spotlights is on companies suspected of earning money or shifting it abroad to avoid paying Italian taxes.
For the article, go here.
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Immigration, offshoring and American jobs
In a Centre for Economic Performance Discussion Paper, Gianmarco I.P.
Ottaviano, Giovanni Peri, and Greg C.wright examine the following
issues:
- How do offshoring and immigration affect the employment of nativeworkers?
- What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrantworkers?
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OECD releases revised proposals concerning the meaning of beneficial ownership in Articles 10-12 of OECD Model Tax Convention
On 29 April 2011, the OECD released a public discussion draft entitled
“Clarification of the meaning of beneficial owner in the OECD Model
Tax Convention.
In light of the comments received on that first discussion draft, the OECD Committee on Fiscal Affairs, through its Working Party 1 on Tax Conventions and Related Questions, made a number of changes to the proposals released in April 2011.
This revised discussion draft includes the revised proposals that theworking Party has drafted.
For the revised discussion draft, go here.
In light of the comments received on that first discussion draft, the OECD Committee on Fiscal Affairs, through its Working Party 1 on Tax Conventions and Related Questions, made a number of changes to the proposals released in April 2011.
This revised discussion draft includes the revised proposals that theworking Party has drafted.
For the revised discussion draft, go here.
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OECD releases revised complete edition of public comments received on the discussion draft on timing issues relating to transfer pricing
The OECD has released a revised complete edition of public comments
received on the June 6 discussion draft regarding transfer pricing
timing issues.
The commentswill be discussed byworking Party No. 6 at its November 2012 meeting and at a Public Consultation to be held in Paris on 12-14 November 2012.
For the comments, go here.
The commentswill be discussed byworking Party No. 6 at its November 2012 meeting and at a Public Consultation to be held in Paris on 12-14 November 2012.
For the comments, go here.
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OECD seeks comment on transfer pricing timing issues
In a June 6 announcement, the OECD Secretariat invites public comments on certain timing issues related
to transfer pricing, in connectionwith thework ofworking Party No. 6
on intangibles and other projects.
For the announcement,which includes a link to the draft on timing issues, go here.
For the announcement,which includes a link to the draft on timing issues, go here.
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OECD releases three-pager on base erosion and profit shifting
The OECD has released a three-page background brief regarding the
organization'swork in the area of tax base erosion and profit shifting
(BEPS).
For the three-pager, go here.
For the three-pager, go here.
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OECD releases revised public discussion draft on permanent establishments
The OECD on October 19 released a revised public discussion draft on the
interpretation and application of Article 5 (permanent establishment)
of the OECD Model Tax Convention.
For the revised discussion draft, go here.
For the revised discussion draft, go here.
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Software firms find tax advantages
Expanding use of cloud computing to deliver software as a service is
making it easier for global software companies to earn and keep profits
outside the reach of U.S. taxes.
For the article, go here.
For the article, go here.
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New York Times calls territorial tax system a "permanent tax holiday"
In a July 18 editorial, The New York Times explainswhy it opposes a territorial tax system for the US.
Says the Times, "The corporate tax system needs reform, to raise more revenue, more fairly. The territorial tax system does not meet those criteria."
For the editorial, go here.
Says the Times, "The corporate tax system needs reform, to raise more revenue, more fairly. The territorial tax system does not meet those criteria."
For the editorial, go here.
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NSYBA comments on Camp international tax reform discussion draft
The New York State Bar Association Tax Section on September 6 issued a
report on the international tax reform discussion draft released by
Houseways and Means Chair Dave Camp on October 26, 2012.
For the NYSBA report, go here.
For the NYSBA report, go here.
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Corporate tax: a race to the bottom
Corporate tax rates have been
falling around theworld since the 1980s and the trend shows no sign of
letting up. The Financial Times' Daniel Garrahan reports onwhether theworld is
engaged in a ruinous race to the bottom.
For the video, go here.
For the video, go here.
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Dell's multiple restructurings aid it in tax avoidance
In a Tax Notes column, David Cay Johnston discusses a restructuring by Dell Inc. thatwould enable it and other
U.S. multinationals to avoid being taxed on their U.S. profits.
For the article, go here. (Subscription required.)
For the article, go here. (Subscription required.)
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How can vulnerable countries cope with tax avoidance?
In Tax Notes news analysis, Lee A. Sheppard discusses how nations like
Norway can copewith the international tax
system, includingwhether they should use OECD model treaties.
For the full article, go here. (Subscription required.)
For the full article, go here. (Subscription required.)
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NFTC comments on OECD discussion draft on revisions to intangibles guidance in OECD Transfer Pricing Guidelines
In a September 12 letter, the National Foreign Trade Council presents
its comments on the OECD Discussion Draft: Revision of the Special
Considerations for Intangibles in
Chapter VI of the OECD Transfer Pricing Guidelines and Related Provisions, dated June 6, 2012.
For the NFTC comment letter, go here.
Chapter VI of the OECD Transfer Pricing Guidelines and Related Provisions, dated June 6, 2012.
For the NFTC comment letter, go here.
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The borders of EU tax policy and US competitiveness
In a University of Miami Legal Studies Research Paper, Professor George
Mundstock examines a European Commission proposal that the member states
of the European
Union allow corporations to elect a harmonized corporate income tax. A
particularly interesting feature of the proposal is that incomewould be
allocated among the member states using a mathematical apportionment
formula
rather than, as currently is the law, by determining the source of
income on a
case-by-case basis.
For the paper, go here.
For the paper, go here.
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Transfer pricing more workable than unitary tax
In a letter to the editor of the Financial Times,will Morris, Chair,
Tax Committee, Business Industry Advisory Committee to the OECD,
responds to recent articles praising formulary apportionment.
For the letter, go here. (Free registration required.)
For the letter, go here. (Free registration required.)
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Manufacturing the future: The next era of global growth and innovation
The McKinsey Global Institute undertook the research in Manufacturing
the future: The next era of global growth and innovation to gain a better
understanding of how manufacturing contributes to developing and advanced
economies in the 21st century. The authors' goalwas to establish a clear fact base on
the current state of the global manufacturing sector and analyze how longterm
trendswill shape manufacturing in the coming decades.
For the full report, go here.
the future: The next era of global growth and innovation to gain a better
understanding of how manufacturing contributes to developing and advanced
economies in the 21st century. The authors' goalwas to establish a clear fact base on
the current state of the global manufacturing sector and analyze how longterm
trendswill shape manufacturing in the coming decades.
For the full report, go here.
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CRS examines tax havens: international tax avoidance and evasion
In a January 23 Congressional Research Service report, Senior Specialist
in Economic Policy Jane G. Gravelle looks at recent legislation and
other proposals by the Organization for Economic Cooperation and
Development (OECD) and the
G-20 industrialized nations that have targeted tax haven countries, focusing primarily on evasion issues.
For the report, go here.
G-20 industrialized nations that have targeted tax haven countries, focusing primarily on evasion issues.
For the report, go here.
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The merits of a territorial tax system
Writing for the Manhattan Institute for Policy Research Issues 2012, Senior Fellow Diana Furchgott-Roth and Research Associate Yevgeniy Feyman examine the merits of a territorial tax system for the US.
For the report, go here.
For the report, go here.
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Levin opening statement at Senate PSI hearing on offshore profit shifting and the US tax code
In his opening statement at the September 20 Senate Permanent
Subcommittee on Investigations hearing on offshore profit shifting and
the US tax code, panel Chairman Carl Levin described various "loopholes"
that have allowed US multinationals to "stockpile" $1.7 trillion in
earnings offshore.
For Levin's statement, go here.
For Levin's statement, go here.
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Sen. Levin lists 10 "offshore tax loopholes" he wants closed
In an October 5 letter to the chairs and ranking minority members of the
Senate Finance and Houseways and Means committees, Senate Permanent
Subcommittee on Investigations Chairman Carl Levin (D-MI) describes 10
"offshore tax loopholes" his panel has investigated.
For the letter, go here.
For the letter, go here.
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Deferred taxes may fluctuate under extended CFC rules
The recently enacted fiscal cliff law could alter the deferred tax accounting of companies subject to controlled foreign corporation rules, but the resulting financial statement ramifications may depend on the accounting strategy thatwas employed during the brief expiration of those retroactively extended tax laws.
For the Tax Notes article, go here. (Subscription required.)Posted on
Cameron: U.K. will focus on tax avoidance at G-8
British Prime Minister David Cameron said Thursday hewill use his country's year-long presidency of the G-8 to target tax-dodging tactics by businesses.
Public anger has been mounting in Britain after lawmakers accused major multinational companies of "immorally" avoiding paying tax.
For the story, go here.
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Corporate tax take has "risen"
A
group of top finance directors has joined the fray as big business
seeks to confront intense public scrutiny of corporate tax planning,
saying companies tax treatment has undergone a dramatic change in
recent years and that the overall burden they face has increased.
Andrew Bonfield, chairman of the tax committee of the Hundred Group, said the changes reflected the policy of successive governments looking for stable tax revenues and economic growth.
For the story, go here.
Andrew Bonfield, chairman of the tax committee of the Hundred Group, said the changes reflected the policy of successive governments looking for stable tax revenues and economic growth.
For the story, go here.
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"Robin Hood" trading tax nudged forward in Europe
A hotly contested tax on financial trades took a big step forward on Tuesdaywhen European Union finance ministers allowed a vanguard of member states to proceedwith the plan.
The so-called Robin Hood taxwould apply to trading in stocks, bonds and derivatives. Although the taxwould probably be small one-tenth of a percentage point or less on the value of a trade it could earn billions of euros for struggling European governments.
Algirdas Semeta, the European commissioner in charge of tax policy, called the decisiona major milestone in tax history and said the levy could be imposed starting next year. But deep concerns about how it wouldwork could still lead to delays.
For the story, go here.
The so-called Robin Hood taxwould apply to trading in stocks, bonds and derivatives. Although the taxwould probably be small one-tenth of a percentage point or less on the value of a trade it could earn billions of euros for struggling European governments.
Algirdas Semeta, the European commissioner in charge of tax policy, called the decisiona major milestone in tax history and said the levy could be imposed starting next year. But deep concerns about how it wouldwork could still lead to delays.
For the story, go here.
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CRS examines where American companies report profits: indications of profit-shifting
Federal tax revenue could increase as a result of tax reform that cuts
the top corporate tax rate to reduce incentives to shift profits to tax
havens, and that revenue could be used to reduce debt and deficits, the
Congressional Research Service said in a January 18 report.
This report uses data on the operations of U.S. multinational companies (MNCs) to examine the extent towhich, if any, MNCs are moving profits out of high-tax countries (or out of the U.S.) and into low-tax countrieswith little corresponding change in business operations, a practice known as "profit shifting."
For the report, go here. (Subscription required.)
This report uses data on the operations of U.S. multinational companies (MNCs) to examine the extent towhich, if any, MNCs are moving profits out of high-tax countries (or out of the U.S.) and into low-tax countrieswith little corresponding change in business operations, a practice known as "profit shifting."
For the report, go here. (Subscription required.)
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As foreign profits rise, corporate tax rates fall
Globalization is creating two misleading impressions about corporate taxes in the U.S.
First, corporate-tax revenue is keeping upwith recent historical averages as a share of gross domestic product. However, that's only because globalization has raised the corporate-profit share of GDP,while reducing the share of labor compensation.
Second, both Democrats and Republicans in Congress are committed to corporate-tax reform in response to globalization. Yet they are unlikely to accomplish much, because each party's desired reforms are pretty much the opposite of the other's.
Consider the state of corporate taxes. In the final quarter of fiscal year 2012, corporate income taxes amounted to 1.7 percent of GDP -- exactly their quarterly average over the past three decades. A closer look, though, reveals that this pattern reflects two contrasting trends.
For the opinion piece by Peter S. Orszag, go here.Posted on
Firms keep stockpiles of "foreign" cash in US
There's a funny thing about the estimated $1.7 trillion that American
companies say they have indefinitely invested overseas: A lot of it is
actually sitting right here at home.
Some companies keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, according to people familiarwith the companies' cash positions.
In the eyes of the law, the Internal Revenue Service and company executives, however, this money is overseas. As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it. And as long as it sits in U.S. bank accounts or in U.S. Treasurys, it is safer than if itwere plowed into potentially risky foreign investments.
For the story, go here.Posted on
Yahoo, Dell swell Netherlands $13 trillion tax haven
Inside Reindert Dooves's home, a 17th- century, three-story convertedwarehouse along the Zaan canal in suburban Amsterdam, a 21st-century Internet giant is avoiding taxes.
The bookkeeper's home office doubles as the headquarters
for a Yahoo! Inc.offshore unit. Through this sun-filled,white-
walled room, Yahoo has taken advantage of the law to quietly
funnel hundreds of millions of dollars in global profits to
island subsidiaries, cutting itsworldwide tax bill.
The Yahoo arrangement illustrates that the Netherlands, in the heart of a continent better known for socialwelfare than corporatewelfare, has emerged as one of the most important tax havens for multinational companies. Now, as a deficit-strapped Europe raises retirement ages and taxes on theworking class, the Netherlands role as a $13 trillion relay station on the global tax-avoiding network is prompting a backlash.
For the article, go here.Member Companies
