Int'l Tax News

Exchanges of information between tax authorities in Latin America brought in an additional 2.1 billion euros ($2.3 billion) in revenue over the last five years, and other transparency measures have allowed Latin American countries to identify at least 27.8 billion euros in additional revenue since 2009.

The Australian Budget released earlier this month had measures for multinational enterprises that ranged from barely a surprise to some game-changers from a tax administration perspective on transactions.

Turkey is getting ready to introduce OECD-brokered global minimum tax rules to protect its right to tax in-scope multinational enterprises operating within its borders, according to Turkish Finance Minister Memhet Şimşek.

Jefferson VanderWolk cautions the international business community and developed countries not to ignore the international tax reform efforts underway at the United Nations and explains how these initiatives reveal important factors in global economic growth and what developing countries think about their taxing rights.

The 2024-2025 Australian federal budget released this month continues to balance inflationary pressures with cost-of-living concerns. In this environment, specific measures on royalty tax avoidance and foreign resident capital gains tax target multinationals and foreign investors in Australia.

A special committee of countries charged with creating draft terms for a global tax treaty on tax cooperation will start hashing out key details of the proposals’ shape and contents in the coming weeks, including how countries will eventually make decisions and what priority issues it will pursue.

Some jurisdictions are at loggerheads over transfer pricing simplification measures under pillar 1 of the OECD’s two-pillar global tax reform plan, dimming prospects of finalizing a deal in June, Italian Finance Minister Giancarlo Giorgetti said.

Martin A. Sullivan explores developments in Vietnam’s plans for implementing pillar 2 and creating an investment support fund and incentives to drive foreign direct investment.

Countries should keep working on approaches for resolving disputes related to global minimum tax rules and consider the legal basis for those mechanisms, such as a multilateral convention, the OECD told G7 ministers.

Unfavorable treatment of the highly lucrative US R&D credit under the global minimum tax is threatening to expose American companies to higher taxes and prompting some to rethink new investments in the US.

Treasury Secretary Janet Yellen said the US won’t sign an agreement to finalize a still-pending global tax deal until India and China agree to key unresolved issues. Yellen told reports, “India, in particular, has been a holdout and China has not really engaged very much in these negotiations at all.”

While more than 140 countries have signed on to the global minimum tax agreement known as Pillar Two, these efforts don’t always have the backing of domestic legislative bodies, some of which have done little to adopt laws that would make Pillar Two effective.

One of the biggest questions about the global minimum tax agreement known as Pillar Two has been how different countries would implement it locally. In the US, Congress must consider the future of the domestic minimum tax on which Pillar Two is based—the Global Intangible Low Taxed Income regime, commonly known as GILTI—before the transition period to adopt the 15% tax ends in 2026.

Agreement on a few key issues under Amount B of the global tax rules has been elusive so far—such as which countries’ choice to use Amount B would be respected under the rules, which transfer pricing transactions would fall in scope, and whether the simplified rules should be optional or mandatory.

Italy has amended its global minimum tax law to include temporary key safe harbor provisions to simplify the application of the tax rules, while Belgium companies can now register for the tax.

The European Commission referred Spain to the EU Court of Justice Thursday for breaching rules on taxation in company mergers. The commission also said Germany, Hungary, Poland and Romania were infringing EU law by not sharing with other EU tax administrations data on earnings from trading via online platforms.

The European Commission is threatening to refer six countries—Poland, Portugal, Spain, Cyprus, Latvia and Lithuania—to the top European court unless they provide details of their implementation of the global minimum tax within two months.

To preserve tax fairness that underlies voluntary tax compliance, the OECD should leave room for facts-and-circumstances exceptions to part of its global tax treaty.

The global minimum tax is turning out to be a huge compliance hurdle for many multinationals, especially those with subsidiaries spread out in hundreds of cities across the globe. In order to pay their global minimum tax bill in a timely manner, large companies need to build new systems to synthesize thousands of pieces of new data and track the differences between countries’ local laws applying the levy.

The design of the global minimum tax is making large multinational companies vulnerable to disputes with countries all over the world—and halfway into 2024, there’s no tool to resolve them due to the differences in adoption of the global tax rules across jurisdictions.

US multinational companies are engaging in what essentially amounts to a political game of chicken, dissolving their overseas holding companies and reshoring ownership of their subsidiaries to delay paying the new 15% global minimum tax—perhaps indefinitely.

What once seemed like an impossibility, a global billionaire’s tax is now being considered by G20 finance ministers.

New Zealand’s coalition government should scrap the previous government’s bill for a digital services tax because the DST could lead the country’s trading partners to respond with retaliatory tariffs, an activist group has warned.

A new study by the European Left estimates that a permanent tax on excessive profitability of near-monopolies would raise between €81 billion and €107 billion.

A bipartisan group of lawmakers in the House and Senate introduced a measure to overturn the Biden administration’s rules implementing the EV tax credit, which they argue are too lenient on China.

Kenya has proposed withdrawing its digital services tax and replacing it with a significant economic presence tax after President William Ruto said the government would review the DST and align it with OECD tax reforms.

The International Tax and Investment Center describes some potential GLOBE rule disputes and analyzes some proposals for a dispute resolution mechanism, focusing on how the tax treaty mutual agreement procedure in article 25 of the OECD model tax convention can best be used.

Reuven S. Avi-Yonah examines the use of tax incentives to encourage location-specific investment and offers a new approach that he says will be more successful.

Australia plans to introduce a new tax penalty for big companies that try to avoid taxes on royalties in its latest move to crack down on multinationals that it says aren’t paying their fair share.

European Union finance ministers agreed in principle to a law intended to speed up cross-border withholding tax refund procedures and that will require EU countries to replace current tax refund systems for cross-border dividend and interest payments with improved, simpler procedures.

The Biden administration will increase tariffs from 25 percent to 100 percent on Chinese EV imports to offset Chinese export practices, which they argued “favor Chinese automakers at the expense of U.S. and other foreign automakers and autoworkers and are leading to a massive surge of unfairly underpriced Chinese vehicles into foreign markets.”

Martin A. Sullivan scrutinizes the no-benefit requirement under pillar 2 of the OECD’s base erosion project, highlighting the tension between incentives and taxation in light of Singapore’s planned implementation of two components of pillar 2.

Tomás Bailey, Colm Brussels, and Rachel O’Sullivan explain how Irish taxpayers can use the EU tax dispute resolution directive to challenge the tax treaty compatibility of EU member states’ digital services taxes.

Northern Ireland should slash its corporate tax rate from 25% in line with the Republic of Ireland’s 12.5% rate for small firms and 15% for large companies, to drive growth in the cash-strapped region.

Reuven S. Avi-Yonah casts doubt on whether bilateral investment treaties offer investors a viable shield from pillar 2’s qualified domestic minimum top-up tax, in response to a recent Tax Notes article.

Regulators including the China Securities Regulatory Commission and the State Taxation Administration are reviewing a plan submitted by Hong Kong to waive the 20% tax on dividends from Hong Kong stocks bought via Stock Connect.

The Norwegian government in March announced its latest step to close tax loopholes for wealthy expatriates by setting a deadline for the payment of an exit tax on unrealized changes in the value of their assets, or their transfer. That plan follows increases in wealth and dividend taxes since 2022 that have prompted dozens of the country’s richest to relocate, mainly to Switzerland.

The European Commission is evaluating the effectiveness of reporting rules that govern collection of information relevant for cross-border taxation and the exchange of that information between EU tax authorities.

Financial services industry groups are calling on the Australian government to be more discerning with the tax information from funds that is made public following it’s country-by-country proposal released in February.

Global policymakers, including the UK, New Zealand, Israel and US states, are imposing new taxes on electric vehicles as the shift away from combustion engines threatens to leave a $110bn hole in government revenues owing to a drop in receipts from fuel duties. 

Mindy Herzfeld explains the uneven effect of the Tax Cuts and Jobs Act’s carrot-and-stick approach to encouraging U.S. multinationals to bring valuable intellectual property back to the United States.

Companies in scope of digital services taxes will probably have more permanent establishments in jurisdictions with DSTs if OECD pillar 1 rules are enacted, according to a Joint Committee on Taxation economist.

EU member states are at odds over how to coordinate the application of double taxation agreements to accommodate the tax complexities of cross-border telework.

Manufacturers have two years to move their critical mineral supply chains away from foreign entities of concern if they want to qualify for the new clean vehicle tax credits, Treasury announced in final regulations.

Błażej Kuźniacki and Edwin Visser explain the difficulties for non-advanced economies trying to attract foreign direct investment while also adhering to new pillar 2 rules, and offer suggestions for new international approaches that could help create a more level playing field for all economies.

US multinational companies may lose the ability to deduct up to hundreds of millions of dollars’ worth of losses incurred from their income starting this year under the new global minimum tax.

Canada’s digital services tax might cause U.S. companies to lose up to $2.3 billion annually, and if the United States doesn’t push back, the “global contagion” of DSTs will spread, a tech industry group said.

Roy Clemons argues that the United States should replace its quasi-territorial tax system and proposes a framework that taxes domestic and multinational corporations at the same statutory tax rate on a country-by-country basis.

Ryan Finley explains why withdrawing the cost-sharing regulations wouldn’t further the policy goals of cost-sharing critics.

Robert Goulder comments on a recent Congressional Research Service report on pillar 1 and digital services taxes.