Int'l Tax News

In this article, the author discusses a nonbinding position published by Mexican tax authorities in November 2018 that attempts to revoke a provision in Mexican law limiting the definition of "business profits"when applying Mexican tax treaties.

In this article, the authors examine the extensive regulations proposed under the alreadywide-ranging anti-hybrid provision of the U.S. Tax Cuts and Jobs Act, focusing on the possible impact of the proposals on the structures that Canada-based multinationals and other foreign entities use to finance U.S. acquisitions and expansions.

A European Parliament investigative committee report chastises seven member states for operating as tax havens, recommends the end of golden visa programs, and calls for a European financial police force and anti-money-launderingwatchdog.

The United States supports France's push for minimum corporate taxation and hopes for an OECD solution to taxing the digital economy before the end of 2019, Treasury Secretary Steven Mnuchin said.

The European Parliament on February 25 decided to put pressure on member states by closing the first reading on the European Commission's proposal for public country-by-country reporting.

In this article, the authors discuss the impact of Brexit and the end of the North American Free Trade Agreement on the derivative benefits test in U.S. tax treaties.

Irish pharmaceutical giant Perrigo Co. PLC has mounted an aggressive response towhat iswidely considered one of the largest corporate tax assessments in Irish history, and is seeking assistance from the Irish High Court.

The Information Technology Industry Council has requested changes to proposed section 163(j) regulations (REG-106089-18) regarding the definition of interest and exclusions from the definition, the application of the interest limitation to controlled foreign corporations, the group CFC election, and the depreciation phaseout.

Treasury's proposed regulations that apply business interest expense limitations under the Tax Cuts and Jobs Act to controlled foreign corporations are inconsistentwith congressional intent andwould create complex, burdensome rules, industry groups say.

Member states should deny tax relief provided in directives that companies exploit to advance abusive or fraudulent agendas, even in the absence of domestic law combating such abuse, according to the EU's highest court.

Germany's Ministry of Finance said government ministers are discussing proposals for research and development tax incentives butwould not confirm reports that the benefitwould cost the government at least ÔøΩ1.5 billion a year.

Although the OECD's failure to address the tax challenges posed by digitalization leaves a void, a report found the proposed digital services taxwould apply too broadly and may cause economic distortions and international retaliation.

Structuring a uniform and comprehensive global minimum tax regime could be a technically difficult process at the OECD level.

The OECD-U.N. Tax Inspectorswithout Borders (TIWB) initiative may expand its scope to include other tax issues beyond tax audits,with pilot programs starting soon.

The U.S. Chamber of Commerce has sent the IRS a chart identifying issues arising under proposed regulations (REG-104352-18) on section 951 and section 951A hybrid arrangements, providing suggested solutions and explanations the group believeswill be helpful in addressing those issues.

Irish power management multinational Eaton Corporation PLC,which is facing tax-related litigation on multiple fronts in the United States,was dealt a blow by the U.S. Tax Court concerning the consequences of partnership section 951(a) inclusions.

The Securities Industry and Financial Markets Association has suggested several changes to proposed base erosion and antiabuse regulations (REG-104259-18),which the group says are inconsistentwith the relevant provisions of section 59A and that some provisionswill harm financial groups, their customers, and possibly the financial markets.

Many U.S. multinationals are responding to the Tax Cuts and Jobs Act's international provisions by terminating their cost-sharing arrangements, raising difficult transfer pricing issues associatedwith their existing cost-shared intellectual property.

Practitionersworry that the integrity of the bilateral tax treaty system is threatened by the spread of measures that circumvent treaty restrictions and the United States' failure to ratify any tax treaties in the past 10 years.

Proposed global intangible low-taxed income regulations may overreach in requiring downward adjustments to the basis of stock held in controlled foreign corporations. The proposed regulations (REG 104390-18) also call for basis adjustments to stock in members of a consolidated group. GILTI-related basis adjustments to CFC stock are distinct from basis adjustments to group member stock in timing and rationale.

U.K. business tax rates should be reduced and taxes on online merchants increased to protect High Street retailers from unfair competition, a parliamentary report says.

A taxworking group commissioned by the New Zealand government has recommended the implementation of a capital gains tax and the adaptation of an existing emissions trading scheme to make it more "tax-like."

Allowing British overseas territories to delay establishing public beneficial ownership registers until 2023 is unacceptable and poses a national security risk, a U.K. parliamentary committee said in a new report.

Treasury is examining how it could limit its rule concerning foreign branch transfers of intangible property issued under its proposed foreign tax credit regulations.

In this article, the author discusses some of the general concerns underlying efforts to tax cross-border digitalized transactions, including how these transactions affect both developed and developing jurisdictions. She then focuses more specifically on taxing digital advertising services by reviewing case studies and suggesting possible solutions.

South Africa is contemplating changes to align its domestic lawwith the OECD's model mandatory disclosure rules and transfer pricing provisions.

Reports of aggressive transfer pricing enforcement practices by Mexico's tax administration ÔøΩ including excessive information demands and disallowance of marketing expenses ÔøΩ are another sign of broad dissatisfactionwith the existing allocation of taxing rights.

The U.K. tax authority has published a "mythbusters" document to clarify its Making Tax Digital (MTD) program, shortly after a top HM Treasury official told lawmakers that most affected businesses are preparing for the initiative.

The General Court of the European Union (GCEU) rendered its judgment T-131/16 and T–263/16 regarding the compatibility of the Belgian excess profit ruling system ('Belgian EPR')with the EU State aid rules. PwC summarizes the GCEU judgment, issued on February 14, 2019, that annulled the European Commission's (EC's) final decision.

Brazil's complex federal and state structure has created a litigious framework for tax authorities, making tax reform in Brazil a continued political focus. The production and consumption of goods and services has born the heaviest tax burden in Brazil for years,which has brought forward series of disputes and challenges between Brazilian taxpayers and municipalities. For that reason, the area has beenwidely viewed as the main focus of tax reform in Brazil.

The European Banking Federation has requested clarification that unintended controlled foreign corporations created solely through the repeal of section 958(b)(4) by the Tax Cuts and Jobs Actwill not be treated as U.S. payors andwill not be disqualified from the portfolio interest exemption due to their CFC status.

In this article, the authors discuss recent U.S. international tax developments, including new regulations on the base erosion and antiabuse tax and sales of partnership interest.

Switzerland's Federal Council on February 18warned that if voters reject corporate tax reform legislation in an upcoming referendum, companieswill face legal uncertainty and the country could be subject to foreign countermeasures.

Singapore plans to extend tax incentives to help scale up businesses and offer a new individual income tax rebate to ensure the country remains nimble and progressive in a changingworld, the finance minister said.

The Irish government has called for input on proposals designed to better harmonize domestic transfer pricing ruleswith OECD standards, including adoption of the authorized OECD approach (AOA) to profit attribution and enhanced documentation rules.

EU Competition Commissioner Margrethe Vestager is maintaining a sanguine outlook on state aid-related tax decisions, despite a court's rejection of the commission's ruling that Belgium offered illegal state aid to multinationals.

Golden Gate Private Equity Inc. has urged that proposed base erosion and antiabuse regulations (REG-104259-18) address the use of net operating losses for modified taxable income, the treatment of a life insurance company that reinsures risks to a foreign-related insurance company through a modified coinsurance contract, and the application of the de minimis dealer exception.

The Tax Executives Institute has commented on the proposed base erosion and antiabuse regulations (REG-104259-18) under section 59A, recommending 10 changes thatwould not only ease compliance and administration butwould also serve to better harmonize the final BEAT regswith the BEAT regime's purpose and scope.

The New York State Bar Association is dissatisfiedwith the section 59A proposed regs' inclusion, as a base erosion payment, of a noncash consideration transaction that otherwise qualifies for nonrecognition under the code.

Over a year after the Tax Cuts and Jobs Act enacted the first statutory change to the transfer pricing rules since 1986, efforts to update the regulations and align themwith the statute remain underway.

New Zealandwill likely start consulting on a unilateral digital services tax by May, citing the OECD's slow progress in finding a long-term solution by 2020 to adapt international tax rules for the digital age.

New Zealand's government announced plans on Monday for a new tax targeting online giants like Google and Facebook that earn plenty of money in the country but pay little tax.

As countries continueworkingwithin the OECD framework toward a consensus-based solution to tax the increasingly digital economy, companies shouldn't be complacent because that debate could fundamentally change theway multinationals are taxed, practitionerswarned.

Germany's Finance Ministry confirmed a report that it is reviewingwhether a 15 percentwithholding tax on royalties can be applied to payments received by foreign internet companies like Google and Facebook for online advertising.

All of the OECD's new proposals for taxing the digital economy ÔøΩ including the U.S.-favored marketing intangibles approach ÔøΩwould radically depart from the arm's-length principle, compounding growing international pressures on traditional transfer pricing principles.

A newworld order is emerging from the OECD base erosion and profit-shifting project and U.S. tax reform. Those efforts, combinedwith larger economic and political forces, have mostly laidwaste to the previous international tax regime.

New proposed section 951A regulations provide guidance on how consolidated groups should compute their global intangible low-taxed income.while the crux of filing a consolidated return is treating the group as a single taxpayer for purposes of calculating and paying a single tax liability, the proposed regulations (REG 104390-18) combine single taxpayer treatmentwith single-entity calculations.

Lee A. Sheppard looks at how the Tax Court's decision in Grecian Magnesite remains relevant, even after the passage of the Tax Cuts and Jobs Act.

Austrian Minister of Finance Hartwig Loeger recently issued an ordinance on the application of the controlled foreign corporation tax regime. The ordinance, published in the official gazette on January 25, took effect January 1.

Jurisdictions under the OECD's Inclusive Framework on Base Erosion and Profit Shifting areworking diligently on their treaty relationships and continue to make progress on timely and accessible dispute resolution mechanisms.