Int'l Tax News

Proposed regulationswithdrawing the debt-equity documentation ruleswill help large corporations avoid spending $924 million in compliance costs over 10 years, but burdens continuewith the remaining anti-inversion, anti-earnings-stripping rules.

Three years after the Organization for Economic Cooperation and Development came outwith its base erosion and profit shifting plan, most tax incentives regimes for intellectual property development are now compliant, signifying that, as one OECD official said, "everybody is moving in the right direction."

Federal Reserve Board Chair Paul Volcker used to carry in his pocket a little slip of paperwith hourly constructionwageswritten on it.

In this article, the authors discuss the Google and Conversant cases,which illustrate the application of French dependent-agent permanent establishment case law to digital economy companies.

The book explores a topic that has been highly controversial in recent years: the use by multinational companies of "base erosion and profit-shifting" tax planning structures to reduce their tax liabilities in countrieswhere they conduct business, including theworld's lower-income developing countries. In this installment,which is the sixth and final chapter, the author considers the challenges of generating the politicalwill necessary to implement measures to curtail profit shifting as it currently affects lower-income countries. The most recent installment appeared in Tax Notes Int'l, July 16, 2018, p. 255.

The European Commission's proposal to tax digital serviceswould be interpreted as a tariff and likely provoke U.S. retaliation, according to a German economic analysis.The European Commission's proposal to tax digital serviceswould be interpreted as a tariff and likely provoke U.S. retaliation, according to a German economic analysis.

The Court of Justice of the European Union in EV v. Germany, C-685/16 (CJEU 2018), held that restrictions that Germany places on the deductibility of distributions of profits from shareholdings in non-member-state companies violate EU treaty provisions regarding the free movement of capital.

German restrictions on the deductibility of distributions of profits from shareholdings in nonmember-state companies violate EU treaty provisions on the free movement of capital, the Court of Justice of the European Union has held.

The IRS has issued guidance (Notice 2018-72) announcing that itwill amend the section 871(m) final regulations to delay the effective date of some rules in those final regs, further extending the phase-in period provided in Notice 2016-76 for specified provisions of the section 871(m) regs, and extending some of the transition rules described in Notice 2010-46.

The IRS has further delayed some dividend equivalent regulations following continued outcry from practitioners about implementing the complicated regime.

The Netherlandswants you to know that it is not a tax haven. But Menno Snel, the country's No. 2 finance official, grudgingly acknowledges that the Dutch have become experts at something else: aggressive tax planning.

China's government is grapplingwith an inconvenient truth: you can't cut taxes, boost spending and reduce the budget deficit all at the same time.

Prime Minister Justin Trudeau's government could make meaningful progress in addressing the nation's competitiveness challenges evenwithout taking the costly step of lowering the corporate tax rate, according to the head of the country's biggest business lobby.

U.S. corporations are required to pay a one-time tax on their offshore profits, but don't expect those stockpiled funds to come onshore quicklyÔøΩor ever. Companies repatriated $169.5 billion in the second quarter, according to data released Sept. 19 by the Commerce Department, up from $34.9 billion a year earlier.

A Swiss bankwill have to repay millions for steering German international retailer Müller Holding Ltd. & Co. KG toward investing in an outlawed dividend-stripping scheme that involved the right to refunds of taxeswithheld from dividend payments.

Far-right Brazilian presidential hopeful Jair Bolsonaro's campaign onwednesdaywas sharply at oddswith the candidate's economic guru overwhether a loathed financial transactions taxwould return, exposing cracks in the front-runner's team.

McDonald's Corp.won a rare reprieve from European Union competition regulators cracking down on unfair fiscal deals for multinational firms. EU officials concluded that the pact between McDonald's and Luxembourg, that allowed the company to side step taxes on its profits, did not break the law.

Starbucks' European business paid an effective UK tax rate of just 2.8 per cent in the year to the end of October 2017 after a payment from another part of the group boosted profits.

FedEx Corp. is signaling to investors that the new proposed rules for the one-time tax on overseas assets could take a hit on its earnings.

Multinationals may not have seen the end of a rule that gives the IRS greater authority to decide how to value intercompany transfers of valuable assets. Temporary regulations that let the IRS broadly apply the "aggregation" method to value a multinational's intercompany transactions expired Sept. 14. But the IRS could still apply those concepts or make the regulations final because a version of those concepts appears in the 2017 tax law and in previous proposed regulations.

New Zealand's tax authority has slammed a report from anti-poverty group Oxfamwhich claims multinational drug companies avoided nearly $4 billion in taxes from 2013-15 by using tax havens to shift profits.

Australian mining giant BHP Billiton Ltd. says it paid $7.8 billion in global taxes and royalties in the 2018 financial year, $3 billion more than it paid the previous year. This is also the first year that BHP has disclosed its profits, number of employees, and effective tax rates in the key countries inwhich itoperates. This disclosure comes amid anti-avoidance groups' campaigns for companies to publicly disclose profits and taxes paid in the jurisdictions inwhich they operate.

"Our in-depth investigation has shown that the reason for double nontaxation in this case is a mismatch between Luxembourg and U.S. tax laws, and not a special treatment by Luxembourg," EU Competition Commissioner Margrethe Vestager said September 19 regarding the European Commission's decision on Luxembourg's compliancewith EU state aid rules.

The European Commission's finding that tax exemptions Luxembourg granted McDonald's Europe Franchisingwere legal shows there's a limit to the commission's strategy of addressing tax issues through state aid investigations, a practitioner told Tax Notes.

In this article, the authors look at how the OECD and the EU plan to address the challenges of taxing the digital economy. They caution against unilateral measures and temporary solutions, suggesting the EU's proposed approach may increase compliance burdens and threaten the delicate balance of international taxation.

The hedged shell company structure the Bank of Montreal used to make $1.4 billion in loans to U.S. subsidiaries did not violate the general antiavoidance rule, the Tax Court of Canada has found.

A formal proposal to overturn the rule of unanimity on tax matterswill be submitted to the EU Council before the end of the year, EU Tax Commissioner Pierre Moscovici said.

Practitioners are pulling no punches as they express their dismay over antiabuse rules ÔøΩ including a provision on reducing pro rata shares ÔøΩ in the proposed U.S. regs on global intangible low-taxed income.

Over six months have passed since the enactment of the TCJA, so it is now possible to reach some preliminary conclusions on its impact.

Eversheds Sutherland has thanked Treasury for meeting to discuss guidance on the new qualifying insurance corporation test for applying the insurance company exception to passive foreign investment company status, providing proposed regulatory language and addressing several issues raised in their meeting.

The American Chamber of Commerce in Japan has proposed solutions towhat the group says are unintended tax costs imposed by the overly broad scope of two provisions of the Tax Cuts and Jobs Act (P.L. 115-97) ÔøΩ the global intangibles low taxed income and transition tax rules.

The Public Sector Pension Investment Board has raised concerns that the aggregation rules for base erosion antiabuse tax purposes, as applied to large institutional investors that hold majority investments in numerous portfolio companies,will be unworkablewithout regulatory adjustments. The board suggested that otherwise unconnected portfolio companies ultimately owned by institutional investors not be aggregated for purposes of applying section 59A(e).

In comments on the application of the base erosion antiabuse tax computation, Treasurywas asked to issue regulations providing that section 59A is to be applied on an aggregate basiswhen the computation of the base erosion minimum tax amount in section 59A(b) is to be determined by treating all taxpayers forming part of the "applicable taxpayer" as one taxpayer.

The Tax Court held that the distribution a couple received from a controlled foreign corporationwas taxable as ordinary income because the CFCwasn't a qualified corporation under section 1(h)(11)(C)(i) and held that they received a constructive dividend from their CFC in Cypruswhen it canceled a debt owed by their S corporation. The court found that therewas a genuine dispute of material fact regardingwhether the Cyprus CFCwas a qualified corporation andwhether a distribution from itwas a qualified dividend.

Oxfam International issued a report September 18 that states theworld's largest pharmaceutical companies ÔøΩ including Pfizer, Johnson & Johnson, Abbott, and Merck & Co. ÔøΩ appear to be avoiding paying an estimated $3.8 billion in taxes annually to 16 countries.

In this article, the author discusses various policies in the Trump administration, including changes to U.S. foreign and international trade policy, tax transparency, entity transparency and beneficial ownership information, and economic sanctions.

Greek Prime Minister Alexis Tsipras recently announced several initiatives ÔøΩ including proposed tax cuts and social benefits ÔøΩ that the government plans to implement in the coming months.

Taxes on carbon and fossil fuels, alongwith the prices of tradable carbon emissions permits, are too low for governments to meet their climate targets, but momentum is picking up, according to the OECD.

The Netherlands' 15 percentwithholding tax on dividendswill be repealed, cutting revenue by ÔøΩ1.9 billion, according to the government's tax plan released September 18 alongwith the 2019 budget.

A distribution from a Hong Kong controlled foreign corporation to U.S. individual shareholderswho elected to be treated as a domestic corporationwasn't qualified dividend income entitled to preferential treatment, the U.S. Tax Court held.

Former IRS official Ron Dabrowski of KPMG interviewed Raymond Stahl, special counsel to the IRS associate chief counsel (international), about proposed GILTI rules and forthcoming guidance under the Tax Cuts and Jobs Act at the International Tax Institute luncheon in New York September 18. The IRS has issued proposed regulations on the repatriation transition tax (REG-104226-18) and global intangible low-taxed income (REG-104390-18). The government isworking to finalize these rules expeditiously.

Artificial intelligence is expected to bring a decisive shift in the taxworldwithin the next decade as more and more businesses and revenue agencies launch pilot projects to deploy the technology.

Ireland has collected ÔøΩ14.3bn in disputed back taxes and interest from Apple, more than two years after Brussels decided that the tech giant's sweetheart tax dealwith the country violated EU law.

Small shareholders of U.S. partnershipswith overseas interests could get smackedwith the 2017 tax overhaul's levy on global intangible low-taxed income, a development creating a slew of unexpected complexities, particularly for private equity funds. The IRS proposed GILTI tax regulations could also factor into some funds' decisions as theyweighwhether or not to incorporate.

Some European Union members may press Ireland to drop its opposition towide-ranging corporate tax reform in return for the bloc's backing on Brexit, according to the European official,who asked not to be identified because they aren't authorized to speak publicly on the matter.

Brazil's forthcoming tax overhaul could make it the latest country to trim its corporate tax rate in thewake of U.S. reforms.

The American Institute of CPAs has urged Treasury and the IRS to amend frequently asked questions on the section 965 transition tax to allow taxpayers to request a refund or application to their 2018 estimated tax liability of the amount of their 2017 estimated tax payments that exceeds their 2017 regular income tax liability, exclusive of the tax amount calculated under section 965.