Int'l Tax News

In this article, the author discusses issues regarding the arm's-length standard and its viability in today's evolving tax environment.

While some member states are moving rapidly to implement digital taxes that the EU failed to agree on as a community-wide directive, observers say such national laws conflictwith the EU's freedom of establishment clause.

Stephanie Soong Johnston delves into the OECD's March public consultation at its headquarters in Paris,where some of the taxworld's brightest minds gathered to discuss adapting the international tax rules for the digital age.

The European Commission has released a report by the Centre for European Economic Research analyzing the possible impacts of the draft common corporate tax base directive of October 2016 on the effective corporate tax burdens in EU member states.

In light of the profit-split method's potentially expanded role under a new regime for taxing the digital economy, the EU Joint Transfer Pricing Forum (JTPF)will exploreways to improve the method's clarity and simplicity.

Final regulated investment company rules clarify the treatment of subpart F and passive foreign investment company income inclusions, reversing Treasury and theIRS's 2016 proposed regulations.

Despite international progress on profit shifting, there are still policy gaps concerning opaque offshore ownership structures and corporate tax avoidance that are costing developing countries needed tax revenue.

The potential impact of a global minimum tax proposal on countries' taxing sovereigntywas a commonly raised issue during the OECD's public consultation.

Similarities between regulatory language in the foreign-derived intangible income provision and section 199 guidance could mean that regs under the defunct statutewill inform taxpayers on applying FDII's foreign use rule for general property.

Mindy Herzfeld examinesways to help the United States fix its flawed base erosion and antiabuse tax, saying the OECD's recent consultation document might offer a favorable path.

Sweden's governmentwants to revisit the idea of imposing a tax on the financial industry. Finance Minister Magdalena Andersson says her goal is to have a levy that singles out bankswith far more precision than previous proposals.

The OECD needs to better definewhat types of incomewould be targeted by new proposals to revamp how multinationals are taxed, the business communitywarned in letters to the group. The OECD is considering four ideas as it seeks a globally agreed-upon solution by 2020 to address some countries' concerns that multinationals aren't paying their fair share of tax, or aren't paying it in the right places.

Traders of European shares may face a new tax bill as finance ministers edge closer to an agreement in long-running talks on a financial-transaction tax.

The public perception that large multinational companies pay little tax has led to political demands for urgent action. The easewithwhich multinationals seem able to avoid tax and the three-decade-long decline in corporate tax rates compromise faith in the fairness of the international system. Recent international efforts ÔøΩ notably through the G20 and OECD ÔøΩ have made it harder for multinationals to shift profits to low tax rate locations. But vulnerabilities remain.

Multinationals looking to stay out of India'swidening tax net may have a new tool: A recent ruling that quashed authorities' attempts to tax income from a company based outside India.

A global minimum tax proposal to rewrite international tax rules for the modern economy may be unnecessary, companies and practitioners told the OECD at a public consultation in Paris. But if the OECD does move forwardwith the plan, it must be simple if it is towork, according to a range of speakers from businesses, non-governmental organizations, and academia.

French Prime Minister Edouard Philippe has said raising taxes isn't the solution to the issues that have been raised in a national debate launched by President Emmanuel Macron.Taxes "are high enough, they must come down," Philippe said on Europe 1 radio.while some taxes could be raised if others are lowered, Philippe says, "I can't believe that the only adjustment tool to resolve our country's problems is fiscal policy."

Companies that engage in cross-border mergers to lower their tax bill are likely to be stopped in their tracks as EU countries are set to have new powers to reject such moves.

In the fourth of a four-part series on the fundamentals of tax reform, James Atkinson and Kimberly Majure debunk five myths arising from the domestic provisions of the 2017 tax law and their interactionwith the law's international provisions.

India and the U.S. have reached an agreement to start exchanging country-by-country reports that disclose inwhich countries multinationals earn profits and pay their taxes.

The earnings and profits of an upper-tier controlled foreign corporation's partners must be increased due to a domestic partnership's income inclusions, the U.S. Tax Court ruled Feb. 25. The IRS determined Eaton Corp. owed tax deficiencies and penalties for 2007 through 2010 for failing to include correct gross income amounts. The reported amountswere underestimated by millions because Eaton didn't increase the earnings and profits of its upper-tier CFC partners, the IRS said. Eaton argued that the domestic partners' inclusions, under tax code Section 951(a), didn't affect the earnings and profits of its upper-tier CFC partners.

Irish Finance Minister Paschal Donohoe has told French Finance Minister Bruno Le Maire that Ireland doesn't support the European Commission's proposal for a temporary digital advertising tax.

The US and France have said theywant industrialised countries to reach a deal on global tax reform this year to ensure that tech companies pay reasonable levels of corporation tax in the countrieswhere they operate.

The OECD should look at the risks companies assume and the losses they incur as it searches for solutions to the global tax debate on the digital economy, a PepsiCo Inc. executive said Feb. 28.

Jersey, Guernsey and the Isle of Man face a financial transparency crackdown, after Conservative MPs ambushed prime minister Theresa May to demand an end to secret company ownership. The three crown dependencies are exempt from EU rules requiring countries to publish registers of the real owners of companies. Transparency campaigners argue that the lack of disclosure has aided large-scale money-laundering. In a letter to supportive MPs, Mr Mitchell and Dame Margaret accuse the crown dependencies of acting "as secret tax havens facilitating economic crime, tax and avoidance and tax evasion", and cite the Panama Papers as evidence.

A European court ruling could mean taxpayerswith investments involving "beneficial ownership" structures could facewithholding taxes because the structures are deemed tax abusive.

Francewill unveil its plan to tax digital companies during nextweek's cabinet meeting, French Finance Minister Bruno Le Maire said March 1.

Multinational companies seeking advanced intercompany pricing agreementswith the IRS may need to fill out a new government Excel toolwith their financial data for special cases, the Internal Revenue Service said.

Five European Union countries stand accused of blocking rules thatwould allow company employees to report illegal activities involving tax avoidance and aggressive tax planning to the media or other external groups.

Robertwillens discusses Eaton Corp.'s failed attempt to argue that three controlled foreign corporations,whichwere upper-tier partners in a U.S. partnership,weren't subject to the same requirements for calculating earnings and profits as domestic corporations.

Part 2 of this two-part Insight continues a review of the tax reforms introduced in Luxembourg,with a focus on how they address the anti-hybrid mismatch rules, exit taxation, and other anti-BEPS measures.

Canada's government is generating unexpectedwindfalls in revenue that could give Prime Minister Justin Trudeau more fiscal leeway than it expected going into an election year.

Part 1 of this two-part Insight looks at the impact of the new Luxembourg tax measures relating to deductibility of interest payments, the general anti-abuse rule and controlled foreign companies.

Digital multinationalswith users in Indiawill have towait at least two more months to learnwhether theywill be on the hook for the 40 percent tax rate that is already applied to foreign brick-and-mortar companies in the country.

Companieswould spend substantial time and money complyingwith an IRS proposal capping the amount of interest payments they canwrite off their tax bills, the American Institute of CPAs said.

European Taxation Commissioner Pierre Moscovici urged nations to support a proposal to scrap the unanimous-vote requirement for approving tax policy, saying it is blocking progress on key measures.

Romania proposed tightening the rules thatwould tax digital advertising revenues large companies earn in the European Union, as EU officials continue negotiating to try to find a version of the law all member states agree on.

US economists led by former US Federal Reserve chair Janet Yellen are uniting in record numbers to back the idea of a carbon tax as the most effective and immediateway of tackling climate change.

American companies in Belgiumwant the next federal government to further lower the country's corporate income tax rate to below 20 percent.

Nigeria and Addax Petroleum's local unit have agreed to settle a dispute over allegations of an unpaid $3 billion in taxes, lawyer representing the company said.

The U.K. government said itwill provide a 47 million-pound ($60 million) aid package for developing countries to help them improve their tax systems and fight tax evasion.

Paraguaywill overhaul its tax system and update corporate laws to boost economic growth and remain the fastest-growing economy in South America. President Mario Abdo Benitez's governmentwill submit bills as soon as next month that may lift tax collection by as much as 2 percentage points of gross domestic product, Finance Minister Benigno Lopez said.

The arm's-length standardworkswell for global companies' internal businesses and should remain the bedrock of international taxation, even though it might be under siege by the OECD, Procter & Gamble Co.'s top tax executive said.

Part 3 of this Insight continues a review of the different forms of digital services tax being introduced as interim measures in a growing number of jurisdictions until a global solution is reached.

Several legislative projectswith impact on the tax laws are currently under discussion in the Swiss Parliament or have already been decided and are expected to enter into force between 2020 and 2022. These include the introduction of the Financial Services Act and the Financial Institutions Act, the elimination of the so-called marriage penalty for direct federal tax purposes, or the regulation regarding tax deductibility of financial sanctions. Howwill the tax reform affect Swiss and foreign groupswith subsidiaries and branches in Switzerland andwhat aspects need to be considered?