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Golden Years Are Over for German Tax Revenues-Finance Minister Scholz

  • By Reuters

The golden years of German tax revenues regularly exceeding expectations are ending, Finance Minister Olaf Scholz told newspaper Bild am Sonntag. Germany has enjoyed a surplus since 2014 as the European Union's largest economy has grown for nine years in a row, but growth is expected toweaken in 2019 as headwinds from trade frictions hamper exports.

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Bolsonaro Aide: Brazil Will Not Hike a Financial Tax

  • By Reuters

Brazilian President Jair Bolsonaro's chief of staff said on Friday that therewould be no hike in a financial transaction tax, contradictingwhat the leader himself said earlier in the day.

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Austria Planning Digital Tax On Large Internet Companies


Austria plans to introduce a national tax on digital revenue of large internet companies such as Facebook and Amazon, its chancellor said in a recent newspaper interview, adding the taxwould be modeled after one proposed in France.

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The Trump Tax Cut: Even Worse Than You've Heard


The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment andwages, and also assured everyone that itwould pay for itself; none of that has happened. Yet coverage actually hasn't been negative enough. The story you mostly read runs something like this: The tax cut has caused corporations to bring some money home, but they've used it for stock buybacks rather than to raisewages, and the boost to growth has been modest. That doesn't sound great, but it's still better than the reality: No money has, in fact, been brought home, and the tax cut has probably reduced national income. Indeed, at least 90 percent of Americanswill end up poorer thanks to that cut.

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Mexican president issues tax cuts for areas along US border


Mexican President Andrés Manuel López Obrador issued an executive order on Monday lowering taxes in municipalities along the U.S.-Mexico border, Reuters reported. López Obrador argued that the movewould spur economic growth, make Mexican business more competitivewith U.S. counterparts across the border and encourage residents to live andwork in northern Mexico rather than migrate to the U.S.

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European Tax Policy To Watch In 2019


Election years in Brussels are a sleepy time for European Union policy, as parliament campaigns and the commission becomes a lame-duck body, but Brexit, state aid and spillover from U.S. tax changes promise a busy 2019 for EU tax policy. A commission in office since 2014 seems unlikely to have much energy left for innovation, and new policies seem set to fall by thewayside as a new grouping of 27 senior officials prepares to take office in November. Butwith the bloc's tax laws made largely by national governments rather than EU institutions, and anti-subsidy powers exercised in a supposedly apoliticalway, tax policy may end up being the exception.

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In 2019, Global Tax Rules In TCJA To Take Flight


With the headline-grabbing issues out of theway, practitioners expect the Treasury in early 2019 to address loose ends of the largest overhaul to the U.S. tax code's international framework in a half-century, before it is fully implemented and operational. Companies that have kept their powder dry andwaited over the past yearwill likely begin to act, creating new international structures around the Tax Cuts and Jobs Act's rules and accelerating the repatriation of overseas income. After years of speculation, expertswill finally have some evidence aboutwhether the TCJA's complex international system of levers, roadblocks, carrots and stickswill achieve the results the U.S. Congress hoped for.

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Digital Battlefront in the Tax Wars


In this article, the authors argue that the high revenue triggers in proposed digital taxes ÔøΩ including the recent Franco-German proposal for a digital advertising tax ÔøΩ may violate state aid law and prohibitions on nationality discrimination in the Treaty on the Functioning of the European Union.

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Argentine Decree Implements Tax on Financial Instruments


The Argentine government has issued a decree implementing provisions of 2017 tax reform legislation thatwill subject income from financial instruments to tax at rates between 5 percent and 15 percent.

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Austria to Introduce Digital Services Tax


In thewaning days of its EU presidency, the Austrian government said itwill introduce a domestic version of the digital services tax (DST) that itwas unable to persuade EU member states to pass.

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Updated DPT Guidance Targets Royalty Withholding Avoidance


The U.K. tax administration has updated its diverted profits tax (DPT) guidance to provide further detail on assessment procedures and alignwith post-2015 legislative developments, including stricter royaltywithholding antiavoidance legislation enacted in 2016.

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Austria Plans Digital Tax While EU Keeps Working on Its Own Levy

  • By Reuters

Having failed to broker a deal on a digital tax during its European Union presidency, Austria said on Saturday it planned to introduce its own levy on tech companies including Facebook and Amazonwhile the blocworks on its plan.

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UK Crown Dependencies Introducing Economic Substance Rules


Each of the Crown Dependencies – Jersey, Guernsey, and the Isle of Man – have tabled legislation thatwill introduce new substance requirements for tax-resident firms engaged in certain industries from January 1, 2019. These proposalswill require companies that are tax resident in Jersey, Guernsey, or the Isle of Man, and are engaged in key activities identified by the EU, to demonstrate that they meet minimum substance requirements as part of their annual tax return to access the territories' tax regimes.

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What Washington state, France and Canada have in common: Why carbon tax fails


When principles meet economics, principles lose. That is the lesson coming from three prominent setbacks to policies intended to target climate change. These sobering results remind us how little people arewilling to pay for professed principles ... and ominously how much government is required in order to make them do so.

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EU Anti-Abuse Rules Enter Into Force On Jan. 1


Rules designed to make it tougher for European Union companies to shift profits to low-tax jurisdictions go into force at the beginning of 2019, the European Commission said Sunday. In a press release, the 28-member bloc said the new rules are based on global standards set up on base erosion and profit shifting in 2015 by the Organization for Economic Cooperation and Development. The rules are intended to keep profits from escaping the EU to placeswhere they could go untaxed, the release said.

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Will 2019 See Climate Maturity?


Never mind every lesson of history: The left's command-and-control program to remake global energy is not politically realistic; anything enactedwould quickly devolve into corrupt rent-seeking (see Germany). And even if it could be passed, its planwould consign billions to a poverty thatwould leave theworld less green. Meanwhile, conservatives have begun to notice a thing or two. A carbon tax is better than many of the taxeswe have,which punishwork, saving and investment. Had a carbon tax been on the table during the Bush and Trump tax-cut debates, those cuts could have been deeper and (importantly) made permanent for budget-scoring purposes.

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Trump's Tax Cut One Year Later: What Happened?


While the long-term effects remain to be seen, the evidence so far does not suggest the sustained investment and productivity growth boosts that Republicans and supply-side economists predicted. Many economists, including those at the Federal Reserve, are cutting their growth forecasts for 2019, in part because of thewaning effect of the tax cuts.

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Tough Company Tax Measures Shelved Until Belgium's May Elections


The decision of Belgium's prime minister to resign after three years in power means a temporary "stay of execution" for several unpopular tax measures affecting large multinationals.

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Unilever India Reviewing Legal Options for $55 Million Tax Fine


The 3.83 billion-rupee ($55 million) fine imposed on Hindustan Unilever Ltd. by India's National Anti-profiteering Authority is "a narrow interpretation of the law and does not take into accountwell-established industry practice," the company said in an emailed statement.

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Treaty Shopping-Is the New Principal Purpose Test a Game Changer? (Part 2)


Part 2 of this series looks at the new Principal Purpose Test. Is the new Principal Purpose Test a game changer for treaty shopping in relation to holding, financing and royalty structures?

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Google, Others Prepare for India's Tough Digital Tax Rules


Digital companies are bracing for India's introduction of tax guidelines thatwill make the country one of theworld's toughest for online businesses.

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Digital Tax Heads to Second Vote Amid Italy Budget Tumult


Facebook, Google and other U.S. technology giantswould pay a 3 percent digital-revenue tax in Italy if the government approves a levy that the Chamber of Deputies is set to consider Dec. 28.

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German 2018 Tax Bill- MNCs Prepare for Change


The German Federal Parliament and the German Federal Council recently passed a tax bill. The 2018 tax bill covers a broad range of amendments to the German tax law.what should multinational corporations be considering now that the German 2018 Tax Bill has passed?

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Transfer Pricing Cases of 2018


Transfer pricing cases add detail as to how the international transfer pricing conventions can be applied, and sometimes suggest fundamental issueswhich merit consideration in future iterations of those conventions. The purpose of this article is to summarise some key transfer pricing cases of 2018 and to draw some general conclusions from them.

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2019 Outlook: Infrastructure, Tax Cut May Top Bipartisan Agenda


Infrastructure and middle-class tax relief are two tax items on next year's agenda that could get enough bipartisan support to move under a divided Congress. The issues could gain momentum because they center onworking AmericansÔøΩa goal for Democratswhowill control the HouseÔøΩand alignwith President Donald Trump's stated objectivesÔøΩa boon for Republicanswhowill control the Senate.

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2019 Outlook: 'End of Treaty Shopping' for Multinationals


Theworld's biggest companieswill find it harder in 2019 to set up some business structures that let them achieve the lowest tax rates, after a novel new multilateral treaty goes into effect.

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India's start-ups fear extinction from 'angel tax'


Indian entrepreneurs and the so-called angel investorswho back them havewarned that hefty tax bills levied on start-ups pose a threat to New Delhi's efforts to remake India as an innovation hub.

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Tax cuts one year on: 'we are on a very unstable fiscal path'


Itwas hailed as a "historic victory" by President Donald Trump, and a "heist" by Democratic senator and possible presidential contender Elizabethwarren. A year after the $1.5tn tax cutwas passed into law, the economic effects are becoming apparent.

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Tariffs overtake tax as focus of corporate America


US executives and analysts are now more focused on tradewar concerns than the benefits of lower corporate taxes, according to a Financial Times analysis of their public remarks since the Tax Cuts and Jobs Act became law a year ago thisweek.

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Tax Sovereignty Will Be a Top EU Issue in 2019


In 2019 the tax debatewill be driven by negotiations between member states on the next European budget.

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Time for an Update: The Digital Economy Tax Debate in 2019


Much like a smartphone in need of an operating system update to keep upwith security threats and repair glitches, the international tax system may need some fixes to address the tax challenges of the digital economy. And, if the debate in 2018 is any indication, governments appear to be getting close to some agreement on the bestway forward.

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Dutch Dividend Withholding Tax Not to be Abolished After All


Many changes have been made by the Dutch government to the original 2019 Budget. Most notably, dividendwithholding taxwill not be abolished after all.

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Treaty Shopping- Is the New Principal Purpose Test a Game Changer? Part 1


Countries have introduced specific anti-abuse provisions such as the beneficial ownership clause to counter treaty shopping: however, could the new Principal Purpose Test change the international tax scene?

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FedEx Threat May Signal Rush to Court Over U.S. Foreign Tax Rules


FedEx Corp. is threatening a court challenge to the government's interpretation of how repatriation taxeswill affect its profitsÔøΩand itwon't be alone. The Treasury Department and the IRSwill likely face awave of such challenges, particularly from multinationals, based on conflicting interpretations of ambiguities in the 2017 tax overhaul.

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Trump's Tax Cuts Have Boosted Bottom Lines, But Not Much Else


Critics of President Donald Trump's tax law centerpiece -- slashing the corporate rate -- argued the savingswouldn't spur big companies to expand dramatically. One year later, some key metrics show theywere right.

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OECD Solution Would Change Where, How Much Companies Taxed


The OECD solution for solving the digital tax conundrum could address how much tax companies pay andwhere they pay it and the U.S. may be happywith that result said Brian Jenn, deputy international tax counsel at the Treasury Department.

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Foreign Stakeholders in U.S. Partnerships Get More Tax Clarity


Foreign investors have guidelines on how a new taxwill apply to their gain from the sale of U.S. partnership interests. But the Internal Revenue Service left U.S. partnerswondering how the taxwill actually be collected. The IRS and Treasury Department on Dec. 20 proposed regulations under new tax code Section 864(c)(8),which applies to foreign investors upon sale, disposition, or exchange of U.S. partnership shares made on or after Nov. 26, 2017.

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AICPA Seeks to Preserve Audit Protection for CFCs

  • By Tax Analysts

The American Institute of CPAs has suggested that taxpayers be able to exclude the amount of deemed foreign taxes paid in the inclusion year of the transition tax under section 965 (generally 2017) from the calculation of the 150 percent special rule for controlled foreign corporations in Rev. Proc. 2015-13 to prevent the unintended denial of audit protection under that guidance.

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Options for Taxing the Digital Economy in Mexico


In this article, the author examines a proposal to tax digital services in Mexico, contemplating both its efficacy and itswisdom, and considerswhether existing mechanismswithin the country's tax system could effectively tax the digital economy, at least until there is a multilateral solution in place.

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Tax Wars: The Battle Over Taxing Global Digital Commerce


In this article, the author describeswhat he calls the emergence of an international tax "war" and provides an overview of global digital taxation reform efforts. He argues that the global digital tax conflict masks a growing dissatisfactionwith how to tax value associatedwith global transactions.

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Malta Ratifies EU Anti-Tax-Avoidance Directive


Malta has ratified into law the EU anti-tax-avoidance directivewith effect from January 1, 2019.

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EU Banking Authority to Get New Anti-Money-Laundering Powers


EU member states have reached political agreement on granting the European Banking Authority (EBA) new powers to fight money laundering.

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Israel Tells Firms to Amend Tax Returns for Stock Options


The Israel Tax Authority (ITA) has issued letters informing companies they must amend prior tax returns to complywith a Supreme Court decision earlier in the year on the taxability of employee stock options.

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Finnish Court Rejects Profit Split Under Prior OECD Guidelines


Because Finnish law incorporates the OECD transfer pricing guidelines effective during the tax year, the tax administration cannot use profit splits for pre-2010 years unless the transactions are too closely interrelated to be priced independently.

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Luxembourg Adopts Anti-Tax Avoidance Law


On December 18, 2018, Luxembourg's parliament approved legislation thatwill implement the European Union Anti-Tax Avoidance Directive (ATAD I). ATAD I contains five legally binding anti-abuse measures,which all member states are required to apply against common forms of aggressive tax planning.

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Pharmaceutical on the Hook for Over $1.63 Billion in Ireland


Generic drugmaker Perrigo could owe Ireland over ÔøΩ1.63 billion because of an alleged mischaracterization of income from intellectual property sales, according to a new public disclosure by the company.

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France's 2019 Budget Changes Approved by Legislature


Altered in response to recent tax protests, French President Emmanuel Macron's 2019 budget has been approved by the National Assembly on a party-line vote.

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China Says Larger-Scale Tax Cuts Coming in 2019


Stressing the challenges and opportunities brought on bywhat it described as unprecedented global changes, the Chinese government said recently that it must implement a more proactive fiscal policy, including large-scale tax cuts.

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U.S. Hybrid Regs Will Take Time to Digest


Proposed U.S. regulations addressing hybrid and branch mismatches generally follow practitioners' expectations,with a few minor exceptions and surprises.

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News Analysis: BEPS Implementation, TCJA Responses Top 2019 Agenda


The past few years have been tumultuous for the international tax system. First, the OECD shook things upwith its base erosion and profit-shifting project,which the organization saidwould help end multinational companies' practice of playing one country's tax system off another's to reduce global taxes paid. That project produced reams of paper, and perhaps even a fundamental change to the international tax landscapewith the introduction of a multilateral instrument to ensure that tax treaties aren't being used to facilitate tax avoidance. Further, some countries have adopted BEPS-recommended reforms in their domestic laws. And justwhen the taxworld seemed to be quieting down from BEPS frenzy, the U.S. Congress passed the most comprehensive reform of its tax system in decades that involved a rewrite of international tax rules that had been fundamental to cross-border planning since the 1920s.

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