Int'l Tax News

One advocacy group reiterated its call for Treasury and the IRS to reverse transition tax guidance that denies taxpayers a choice on how to apply their 2017 estimated tax overpayments.

The EU has a little problem regarding its tax harmonization efforts. But then, that's nothing new.

This article presents the second part of a two-part articlewhich considers the implications of the new permanent establishment definition and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS.

Chilean President Sebastian Pinera has shared his plan to reform corporate tax in a bid to raise the gains of bringing cash back to the country. Contrary to global trends, President Pinera has not made the case for cutting the headline corporate tax rate. Rather, the conservative leader has argued for bringing down the effective rate for taxpayers from more than 44% to 35%without cutting headline rates.

U.S. companies have moved cautiously in repatriating stockpiled overseas profits in response to last year's tax-law change, despite the Trump administration's assertions that trillions of dollarswould return home quickly and supercharge the domestic economy.

Francewill abolish a tax imposed on the capital gains of top earners and entrepreneurswho leave France and sell their assetswith a more-targeted levy designed to deter tax optimisation, a finance ministry spokesman said on Saturday.

A central plank of the TCJAwas to improve the incentives to innovate and invest, and to make U.S.-based multinationals more internationally tax-competitive. A key part of this effortwas to move toward a more territorial-based corporation tax,with minimum taxes like that on GILTI to ensure compliance. Now, however, those intentions are being violated as companieswithout intangible-related income are being swept up in the GILTI tax, and they are being taxed at rates above the new 21 percent statutory corporate rate.

The articleexploreswhen transfer prices are the most informative to calculating reasonable royalty damage awards in patent cases and how transfer prices are devoid of some of the distortions that plague existing patent licenses between unrelated parties.

The ability of states to quickly cash in on a June U.S. Supreme Court ruling that lifted restrictions on their ability to tax all internet saleswould be restrained under federal legislation announced on Friday. U.S. Rep. Jim Sensenbrenner said the bill he introduced thisweekwill clarify interstate sales tax collection requirements, prevent states from imposing sales tax collections on retailers before Jan. 1, and bar retroactive taxation.

Thousands of Costa Ricans kept up a fourth day of marches and awide publicworkers strike on Thursday to protest a proposed fiscal reform,whichwould convert the country's 13% sales tax to a value added tax.

The digitalization of the economy raises tax challengeswhich the OECD is trying to resolvewith a measure that changes of the definition of permanent establishment. The amendment's objective is to provide existing tax treatieswith sufficiently broad definitions to embrace the digital economy,which is currently not the case as recently illustrated by two decisions of the French courts. This article discusses the two most recent decisions by French courts andwhether there is a need for further definition of permanent establishment.

The IRS proposed regulations this past Thursday thatwould soften the blow of a new levy targeting companies that book income in low-tax countries. One of the measureswould allow large multinationals to consolidate the tax at one time for all of their entities aswell as provide guidance on how to calculate the Gilti tax.

On Sep. 12, the Czech government's executive branch approved a uniform local accommodation taxwith the aim to introduce a single tax thatwould apply to all providers of short-term accommodationwithout regard forwhere the accommodation is orwho provides it. This proposed tax is the latest measure the Czech government has introduced as it adjusts its taxation of the sharing economy.

Global intangible low-taxed income and other types of foreign income inclusions qualify for purposes of a real estate investment trust's income qualification test, but some foreign exchange gains don't.

The IRS has issued proposed regulations (REG-104390-18) implementing provisions of the Tax Cuts and Jobs Act (P.L. 115-97) that require U.S. shareholders to include global intangible low-taxed income generated by controlled foreign corporations in their gross income.

Proposed regs on global intangible low-taxed income focus on computational issueswhile leaving significant questions on expense allocation for another time.

HM Revenue & Customs defended its efforts to raise awareness of Making Tax Digital (MTD) for VAT after a leading accountancy bodywarned that many businesses remain unaware of the program.

The OECD has updated its country-by-country reporting guidance to allow jurisdictions the choice ofwhether to require that dividends be included in pretax profit and provide for consistency across items for minority interest entities.

The OECD has released the first of three sets of comments received on its consultation regarding transfer pricing aspects of financial transactions that addresses issues such as treasury function, intragroup loans, hedging, and captive insurance.

As interest in India's advance pricing agreement program grows and its application backlog expands, the number of signed agreements has dropped and the time to completion has stretched to record levels.

The United States' adoption of the Tax Cuts and Jobs Act has made the case for an EU-wide common consolidated corporate tax base (CCCTB) stronger and more urgent, according to a European Commission official.

By Ryan Finley

The proposed regulations on global intangible low-taxed income could lead to taxable phantom income because of their approach to calculating tested income and loss and the disallowance of net operating loss and capital loss carryovers.

Proposed regs on global intangible low-taxed income may have just been released, but consternation over an antiabuse provisionwithin the guidance has been swift to develop among practitioners.

The Tax Cuts and Jobs Act changed the tax consequences of the receipt and payment of some types of fixed or determinable annual or periodic income, including dividends, interest, rents, and royalties.

The base erosion and antiabuse tax may reflect concernwithin Congress that the arm's-length standard is slipping as an effective transfer pricing method. However, the new law is flawed in its drafting, making its application to taxpayers overbroad and inconsistent across industries. Treasury's ability to fix these problems through regulatory guidance is hindered by a lack of legislative history. Other countries looking to the United States for leadership in this area should beware.

The potential effects of the U.S. Tax Cuts and Jobs Act on the Canadian economy have been hotly debated, but a new report suggests that significant percentages of Canada's GDP and employment are at risk.

A Canadian court upheld adjustments totaling C $470 million ($362 million) to taxable income of food retail giant Loblaw Companies Ltd.'s subsidiary, denying challenges under Canada's controlled foreign company and general antiavoidance rules.

A House of Lords committee's inquiry into the draft finance bill is seeking evidence of "perceived unfairness" in U.K. tax policy or enforcement.

The National Association of Manufacturers has asked Treasury to avoid imposing rules under the Tax Cuts and Jobs Act (P.L. 115-97) thatwould mandate reallocation of former general limitation foreign tax credits against the new general limitation and foreign branch baskets and to limit any new taxes on manufacturers, consistentwith congressional intent.

A manufacturers' coalition urged Treasury, in its coming guidance, to ease the corporate burden created by the combination of global intangible low-taxed income and expense allocation rules and to provide transitional foreign tax credit rules.

With the first conviction under the Foreign Account Tax Compliance Act, time may be up for financial institutions trying to avoid U.S. reporting obligations.

Taxpayers may have to assert the inapplicability of the base erosion and antiabuse tax to their circumstances by filingwith the IRS rather than staying silent, if a recent draft form is any indication.

The European Commission in January or February 2019will propose abandoning the unanimity rule on tax issues, commission President Jean-Claude Juncker announced September 12.

Israel has adopted safe harbor rules providing for a range of prices for intercompany services thatwill be accepted by the Israeli tax authority, thus reducing the transfer pricing compliance burden for multinational companies.

Multinational companieswill have to provide more details to the Chilean tax authority on how it prices sales of goods between its units located in Chile under draft tax legislation presented to the nation's Congress. The legislationwould rewrite Article 64 of Chile's code covering the power of the tax authority Servicio de Impmuestos Internos (SII) to assess the value of intercompany sales of goods and services, providing more detail ofwhen and how the power can be used.

Canada's government is planning targeted measures to boost competitiveness rather than a broad, across-the-board cut to the nation's benchmark corporate tax rate, according to Finance Minister Bill Morneauwhowill address business concerns on competitiveness in his fall economic update.

The Swedish government, in a Sept. 4 announcement from the Ministry of Finance, announced a reworking of itswhite list,which is made up of countries inwhich foreign income isn't subject to Swedish taxation. The changes are meant to alignwith the EU's Anti-Tax Avoidance Directive, and make aggressive tax planning more difficult resulting inmore foreign-owned companies exposed to Sweden's corporate anti-avoidance rules.

South Africa's controlled foreign company regimeÔøΩwhich limits tax avoidance through the use of entities set up in low-tax jurisdictionsÔøΩhas ended up creating an over-sized compliance burden for companies, practitioners say. The controlled foreign company regime is aimed at aggressive tax planning among multinational companies, but the burden of compliance is significant, often for relatively little additional tax revenue.

Malaysia is having a bumpy rollout of its sales and services taxÔøΩfrom confusion at the shipping ports to concerns about profiteering. Services are taxed at 6%, covering sectors like information technology, hotels and restaurants, insurance, and telecommunication,while the sales tax can be either 5% or 10% depending on the product. Contributing to the confusion is the fact that the government hasn't finalized the list of services that are subject to sales and service tax, and companies are still lobbying to be included in the list of exemptions.

Japan is considering giving carmakers fiscal support including tax breaks to offset the impact from trade frictionswith the United States and a sales tax hike planned for next year, government sources told Reuters onwednesday.

The Swiss parliament approved a corporate tax overhaul onwednesday that it hopeswill stave off the danger of it landing on a European Union blacklist of uncooperative tax havens.

Corporate China is bracing for a big tax increase as the government steps up collection of payroll levies that fund the country's social insurance programs, after years of allowing smaller companies to shirk their obligations.

U.K. multinationals have revealed a possible $1.1 billion tax bill resulting from an EU state aid probe into a U.K. tax relief, just months before the island nation exits the bloc. So far 21 companies have revealed, in regulatory filings, 877 million pounds ($1.1 billion) in potential tax liabilities from the investigation according to data compiled by Bloomberg Tax.

The OECD's plan to combat corporate tax avoidance has brought about a new level of "tax craziness," marked by countries taking unilateral measures, Nishana Gosai, former head of transfer pricing at the South African Revenue Service said. The result is more tax disputes and tax competition, as individual countries are less unified and opting for unilateral measures.

MTN Group Ltd., Africa's largestwireless operator, claims the Nigerian Attorney General's office exceeded its powerswhen it demanded MTN pay about $2 billion in back taxes. The South African mobile-phone company has been rocked twice in the past twoweeks in its biggest market,with the central bank and the attorney general accusing MTN of illegally repatriating funds and failing to pay the back taxes.

The Indian tax authority faces a high bar to convince an international panel of the merits of its claim against Cairn Energy Plc. The retroactive nature of India's tax claim alongwith mixed messages from the country's authorities have the potential towork in Cairn's favor.

IFA's panel on EU developmentswas critical of the EU's digital taxation package and state aid aggression.

It is common for OECD member countries to consider investments in tax havens and preferential tax regimes (PTR) as harmful practices that may enhance tax evasion. These regimes attract investment that allow taxpayers to shift/shelter profits in such jurisdictions. To counter such practices, Mexico and many other OECD countries have enforced various anti-avoidance rules under their legislations.

Former U.S.Federal Reserve chair Janet Yellen has spoken out in support of a carbon tax as the most effective and efficientway to reduce US greenhouse gas emissions. Yellen has joined the Climate Leadership Council, a bipartisan group pushing for the US to address the threat of globalwarming by introducing a carbon tax,with revenues returned to the public in dividend payments.